Home Buying 101: Completing a home loan application

If you’re thinking about buying or building a home, you’ll probably have to complete a home loan application.

This can be a time consuming process where mistakes can be costly. Find out everything you need to know about applying for a home loan, including a list of documents that you may be asked to provide.

When applying for a home loan, it’s important to remember that each lender will have specific requirements and processes. However, one thing is universal — it pays to be prepared!

To help you get ready for this next big step in buying a home, we’ve outlined the basic process and all the documents you’ll need to compile in order to complete your home loan application.

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Before you settle on any particular lender, it’s important to do your research. You want to choose a home loan that will offer you the most favourable conditions. This could help you have thousands of dollars over the course of your home loan. 

If the sheer volume of choice is overwhelming, or you’re just not sure where to start, it may be worth seeking the advice of a mortgage broker. They can help you narrow down your options. 

Once you’ve settled on a lender, the process will go something like this: 

  1. Complete and submit your home loan application.
  2. You will be assessed for pre-approval, which will give you a better idea how much your lender is willing to give you.
  3. All of your documents will be assessed and your lender will perform a verification and credit check. 
  4. Once you’ve made an offer on a property and it has been accepted by the seller, your lender will perform a valuation. 
  5. With everything in order on the valuation, your lender will approve your loan. Now you’re ready for settlement. Contracts are signed, fees are paid and the title will be transferred to your name.

Documents required to complete your home loan

Providing your documents is a key step in securing pre-approval and subsequently being approved for a home loan. This also happens to be the most labour-intensive step of completing your home loan application. 

You will be required to provide documents regarding:

  • Personal identification 
  • Income details
  • Assets and liabilities 

Depending on your personal circumstances and your lender, you may also be required to submit additional documentation to prove your ability to repay your mortgage. 

Personal identification documents

As you might have guessed, you will be required to supply your lender with documents that verify you are who you say you are. 

You should provide primary forms of identification with a photo. This can include:

  • passport
  • driver’s licence 
  • other photo ID such as a proof of age card or Australian student ID card.

If you’re not able to provide primary forms of identification, you may be able to provide two forms of secondary identification. This can include: 

  • birth certificate
  • medicare card
  • credit card
  • healthcare card
  • citizenship card.

Income documents

In order to assess your current financial situation, your lender will need to look at your proof of income. The documents you will need to provide will depend on your personal situation. For example, are you an employee, self-employed or does your income come from assets such as rental properties. 

Some examples of documentation to prove your income include:

  • recent payslips
  • most recent payment summary
  • business tax returns
  • personal tax returns
  • ATO assessments
  • rental statements
  • bank accounts
  • share dividends and interest earned
  • Centrelink statements.

Assets and liabilities 

In order to determine if you will be able to make your loan repayments, your lender will need to look at all of your assets and liabilities. This will give them a clearer picture of your financial situation. It’s important to be honest when providing documentation around assets and liabilities so your lender can make an accurate assessment. 

You should be prepared to provide the following documentation:

  • savings account statements
  • details about any existing loans
  • share investment statements
  • credit card statements
  • superannuation statements
  • proof of property or vehicle assets
  • list of everyday living expenses.

Other documentation

Your lender may need additional information around your finances in order to assess your situation. For example, if you have a spotty credit history, you may be asked to provide further proof of income. Or, if you’re a first time buyer, you will be asked to provide a copy of your First Home Owners Grant Application. 

Depending on your circumstances, you may also be asked to provide: 

  • guarantor documentation if you’re applying with a guarantor 
  • existing insurance policies
  • a copy of the valuation report (if it has already been completed)
  • a copy of the Contract of Sale for the property you’re buying
  • supporting evidence for any other funds that are contributing to the purchase of the property.