Recently one of our contributors took the first step towards buying his first home and requested an information pack from a mortgage broker. After quite a pleasant conversation, our contributor was informed that he would be required to fill out quite a few forms in order to assess whether or not they could be pre-approved for a home loan.
What happened next was quite unexpected for our first-timer, he was required to disclose pretty much every piece of his financial history. What we thought was to outline some of the key things that he didn’t have handy that he had to dig out in order to apply correctly.
Pay Slips
They were really interested in your previous pay slips. Unfortunately we didn’t have too many of them handy and hence that proved a little bit difficult - especially if you change jobs regularly. So our tip for all of you out there is to make sure you start collecting up your pay slips and keeping them in a safe spot in order to present them if required.
It makes sense though that the lender would want to know your regular cash flow situation before taking it any further. No money (or cash flow) - no home loan, plain and simple.
Identity Documentation
He found it interesting that they wanted proof of id, especially so early on in the process. Obviously they need to claim the validity of the information that has been provided to them, and so they are entitled to that information. Other personal data such as whether or not you are an Australian citizen or resident plays a part as well. There could be risks that the lender must absorb when lending to someone that might not be the citizen.
Anyway, for security of your own personal identity, you should always have your identification in a safe place and copies made and stored in various locations of family and friends.
Loan Disclosure
If you think you can be tricky and avoid this part, you would be wrong. They are going to find out anyway, you have provided all your personal details in the set before - so you might as well admit you might not always pay your loans back on time. Assuming you are a relatively young Australian - there is a good chance you probably just have a car loan or small personal loan you took out to spend for 3 months in Europe. Also though, if you have any family loans (your folks gave you a little bit of cash to tide you over that you need to pay back) that needs to be disclosed as well.
It all adds up to determine whether or not you are good for the loan.
So applying for a home loan might not be as easy as it sounds. You definitely need to set aside some time to firstly collect, then copy, then forward all the relevant documents to a broker. But remember - the more accurate information you provide, the better the answer back you will get. And who knows, they might even come back with something better than you first thought!
Let us know about your experience when you went to visit a mortgage broker - we would love to know!
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