What Documents do I Need for a Loan?
No one likes paperwork, however, providing your broker with the right documentation will save you time and money.
What Information will your Broker ask you to Provide?
When you ask to enlist the services of a broker, they will probably ask you for a mountain of documentation the following is a start:
– Identification, including photo ID such as driver license
– Income verification documentation such as recent payslips
– Birth certificate, if you are applying for a government-funded first home owner grant
– Bank Statements
– A recent PAYG summary
– A notice of assessment from the Australian Taxation Office
– Tax returns
– Proof of your contribution toward the transaction, such as savings or deposit statements
– Purchase contracts for a home loan, including building contracts, or plans if building
– Details of assets and liabilities including interest rates and fees, repayments and exit costs for existing loans
Why is this Information Important?
While it may seem that you are climbing the Mount Everest of paperwork, a broker will ask for all of this to ensure they are protecting you and that they get you the best possible deal.
Gathering various forms of documentation allows brokers to do a fact find, which is an important part of the loan process.
This is the process by which brokers ensure that they match a client with a loan that helps them achieve their property goals, whether that is buying a home to live in, one to renovate and sell, or a long-term investment, and one that matches their financial position.
Will a Bank ask for the same Documentation?
If you apply for a loan with a bank that you do not currently have an account with, they will require much of the same information as a broker would.
Although borrowers may be able to avoid the paperwork by applying for a loan with their current bank (which will already have a lot of information on file), this means being constrained by the products that particular bank offers, and risks missing out on a great deal.
The benefit a broker has compared to an individual bank, is the broker has access to many banks and lenders across Australia. Lending policies and pricing vary greatly across the lending market, and some clients do not realise this, so why waste time going directly to a bank?
It is also likely to mean missing out on having a broker match a loan to longer-term goals, rather than just a purchase price and interest rate., saving you time and money.
A broker can usually tell a client within 10 minutes whether they have a chance of obtaining loan approval.
Brokers have access to bank loan affordability and serviceability calculators, which show clients’ potential borrowing capacity, depending on the size of the funding required, and the loan to valuation ratio, these days the banks are extremely competitive, and we can quite often get a better price deal than advertised.
If a client is not yet in a position to obtain a loan, or has a credit issue on their file, such as a default, having a broker on-side can be invaluable. There are lenders that are happy to deal with clients who have defaults or the broker may advise to wait until the default drops off the client’s credit file. Brokers are the experts in finding you a loan that matches not just your finances, but your future plans, and are available at a time that suits you (although I need LOTS or beauty sleep, so a little notice in advance is appreciated by the wife and family).
Loan Broker to the Aussie Battlers