Get Your Paperwork Ready: Essential Documents and Bank Policies

When it comes to applying for a home loan, being prepared with the right documents and understanding the policies banks use to assess your application can make all the difference. Having your paperwork ready and knowing what lenders are looking for can significantly improve your chances of getting your home loan approved, and can help the whole process move much more smoothly.

Essential Documents You Need

Identification

You’ll need current identification for everyone involved in the loan application. This usually includes a driver’s licence, passport, or other government-issued photo ID.

Income verification for PAYG employees

If you’re a PAYG employee, you’ll typically need your two most recent payslips and, in some cases, your most recent group certificate or income statement, to verify your income.

Income verification for self-employed applicants

If you’re self-employed, lenders generally need more documentation to verify your income. This usually includes your last two years of personal and business tax returns, along with the corresponding notices of assessment.

Proof of savings

Lenders want to see evidence of genuine savings, which usually means at least three months of savings account statements showing a consistent pattern of saving over time.

Rental history

If you’re currently renting, a rental ledger or statement from your property manager showing your payment history can help demonstrate your ability to meet regular repayments.

Transactional bank accounts

You’ll usually need to provide statements for your everyday transaction accounts, so lenders can see your spending habits and confirm your financial position.

Credit card and loan statements

Statements for any credit cards, personal loans, or other debts help lenders understand your existing financial commitments.

Buy now pay later accounts

Lenders are increasingly asking for statements from buy now pay later services as well, as these are treated as a financial commitment in the same way as other forms of credit.

Understanding Bank Policies

Loan to Value Ratio (LVR)

LVR is the percentage of the property’s value that you’re borrowing. Different lenders have different maximum LVRs they’re willing to lend at, and this can affect whether you need Lenders Mortgage Insurance.

Minimum apartment size

Some lenders have minimum size requirements for apartments and units, and properties below this size may attract a lower maximum LVR or may not be accepted at all.

Preferred property zones

Lenders often have preferred, and sometimes restricted, zones for lending, particularly for higher density or rural properties, so it’s worth checking how your target property is likely to be viewed.

Title preferences

Some lenders have particular requirements or restrictions around certain types of title, such as company title or strata title, which can affect your borrowing options.

Self-employed requirements

As mentioned above, self-employed applicants are usually assessed under a different set of policies to PAYG applicants, with more documentation required to verify income.

HELP/HECS debts

An outstanding HELP or HECS debt is treated as an existing liability and will be factored into your borrowing capacity calculations.

Buy now pay later services

As with credit cards, buy now pay later accounts are treated as an ongoing commitment, and even accounts with a nil balance can affect your borrowing capacity under some lenders’ policies.

Every lender has its own set of policies, and they can change regularly, which is why it helps to have a broker who keeps on top of these changes and can match your situation to the right lender the first time.

Need Help Getting Your Paperwork Ready?

If you’d like help understanding exactly what documents you’ll need or which lender’s policies best suit your situation, get in touch on 0417 320 233 or jane@justrightlending.com.au.