Home Loan Application Checklist

What should I do before I apply for a Home Loan? 

Before you dive into the home loan application process, here’s some things to consider to make sure you’re on the right track: 

• Check your finances
  Review how much you have saved for a deposit and make sure you can comfortably afford it without putting yourself under financial stress. 
• Evaluate eligibility
  Suss out the eligibility criteria for a home loan to see if you meet it. This includes factors like your credit score, income stability, and employment history and is essentially your ability to repay your loan amount. 
• Compare lenders with iSelect
  Don’t settle for the first lender you come across. Compare different lenders’ interest rates, loan terms, and fees to find the best deal. 
• Assess loan options
  Understand the types of home loans available – fixed-rate, variable-rate, or a combination. Choose the one that suits your financial goals and risk tolerance. 
• Budget for additional costs
  Consider additional costs like stamp duty, legal fees, and insurance. Make sure you have a realistic budget that includes all these expenses. 

What documents will I need to apply?

When gearing up for that home loan, these are typically the documents you’ll have to rustle up: 

Identification 

If you’re a newbie with the financial institution, pack your photo ID. This can be your Aussie driver’s licence, passport, or proof of age card. Or failing that, you can use any two of these:  

• Birth certificate
• Citizenship certificate
• Pension card from Centrelink
• Overseas driver’s licence
• A household bill 

Income 

Grab copies of your bank statements for the last three months (or six if you’re a casual employee). Also, bring along your latest payslip, or an employment contract or a letter from your boss spelling out your base wage.  

For the self-employed, it gets a tad more intricate. You might need your personal tax return from the latest year (double that timeframe if you’re a sole trader), your most recent ATO Notice of Assessment, or a note from your accountant confirming your whole tax deal. Toss in your latest business tax returns and financial statements, flaunting your profit and loss for the last two years. 

If you’re earning income from a rental property, cough up a statement from the property manager, the current lease agreement, or the freshest tax returns proving you’re the landlord extraordinaire. If you receive any government income, Centrelink will need to provide a letter confirming your benefits. 

Other income and expenses 

If you’re juggling other income streams, bring the paperwork to prove it. Calculate your living expenses – break down the monthly cost for food, transport, clothes, utilities, education, and healthcare. Once you’ve got all that sorted, there are a few more things to disclose like insurance documents and your personal assets, but check with your potential lender to see precisely what they need. 

First Home Buyer Grant applications 

Buying your first home? Congrats! Depending on where you live, you might be able to score some sweet perks. The application requirements also differ from state to state, so your best bet is to check the requirements for where you live. You’ll often need to provide a good selection from the standard array of identity documents. Think evidence of citizenship and residency, plus photo ID and things like divorce records if they’re applicable.

What can I do to improve my chances?

To boost your home loan chances, start by doing a credit check. Lenders snoop around your credit history, so make sure it’s clean – no unpaid debts or late bill payments. Remember, they have a two-year memory and can hold a grudge for up to five years for credit defaults. Pay off any lingering debts; it shows them you’re on top of your game. 

Next, consider some of the following actions to shine up your application: 

• Tackle those debts head on: Clear your credit card, personal loans, and any other financial baggage. It beefs up your borrowing power, and lenders dig that. Prove you can juggle existing debts while handling a mortgage, and you’re golden.
• Build up your deposit: While there may be lenders who accept a deposit as low as 5% (especially for first home buyers), the preference is for around 20% or higher. That said, if you have a low deposit, you may be subject to Lenders Mortgage Insurance (LMI) fees.
• Lenders love a stable job history: Don’t go job hopping right before the loan application – they want to see you’re in it for the long haul. Prove your income game with pay slips, employment details, and the last two tax returns.  

Pro tip: Aim to keep those mortgage repayments under 30% of your monthly income – it’s a sweet spot.

How do I apply for a Home Loan?

Alright, ready to dive into the home loan game? The first play is to hit up your chosen lender – give them a shout, and they’ll sort you out with a sit-down or a video call. You may even be able to start your application online. 

Where can I find and compare Home Loans?

If you’re scratching your head about which lender to roll with, there’s a very easy way to figure that conundrum out … We’ve teamed up with Lendi, your go-to mortgage matchmaker, to make your life easier. Use our nifty online tool to compare a bunch of home loan options.  

Oh, and don’t forget, reviewing your choice of lender is a smart step, too, so let’s get you on the road to a home loan match that’s right for you!