Applying for your first mortgage can be nerve-wracking as it determines how much a lender will offer as a mortgage and whether that’s sufficient to purchase a suitable property in your target location.
Your first goal must be to secure pre-approval. This is a conditional promise of a mortgage based on your financial situation. With a pre-approved loan, you can bid at auction or make an offer with confidence.
However, your lender only issues the loan after valuing the property and determining that you’re paying a reasonable price. If they think the prospective mortgage is greater in value than the property, they can back out so discuss this with your lender.
For those seeking a mortgage for the first time, a mortgage broker may be invaluable in helping to navigate the complex world of home loans. They’ll also help with the stress of getting your paperwork ready to make the application.
Here are the essentials to start collecting in preparation for a mortgage application.
Identity
You’ll need a driver’s licence and passport. Either maybe be substituted with a Medicare card or birth certificate. Non-citizens must show their visas. A lender will ask for your mother’s maiden name, details of your nearest relative and where you’ve lived during the past three years.
Earnings
Up to four payslips, a bank statement and the last two tax returns will be required. You should also declare if you have any companies and an ASIC registration.
Wealth
You’ll need to prove your savings with a bank statement that covers the previous three months. Also state any shares you own and other assets such as a car or other vehicle.
Debts
Declare any loans, such as those for a car, furniture or holiday. Show the last three months of your credit card spending.
Outgoings
Estimate your day-to-day expenditure and use your credit/debit card statements to indicate spending habits. Show receipts for any rent you pay.
Dependents
State whether you are responsible for anyone else (e.g. children, spouse).
History
Don’t try to hide any issues. Your credit rating and history are easy to find. You’ll also need to state your work history for the past three years.