As I have just been approved for my very first home loan (wohoo) I felt it would be a good experience to share with you all.
Before we even get started on borrowing – you should have a good overall idea of your financial position. Your assets versus your liabilities including your living costs and where you stand at the end of it all. Include your contents, sporting equipment, tools and anything of value – even your comic book collection from the 60’s can add value here. A simple spread sheet is all you need – we have a great template here at Blue Wave Property Strategies – contact me email Bianca and I will get one out to you asap.
Whether you are purchasing your first home and applying for your first mortgage, refinancing your current loan for a better rate or tapping into your current equity to purchase your 4th investment property there some things that you need to know.
Especially if this is your first time there are some things to start organising up to 12 months before you are going to apply for your loan.
The first is getting your bank accounts in order. This means making sure your money looks good. Getting your savings up – most banks will need to see a genuine 10% (of your purchase price) savings and that you have had this amount saved for 6 – 12 months. A few banks will allow a gift of 10% (along with a statutory declaration from the gifter) but most will want to see this 10% saved in your account for a minimum of 6 months. So if you are being gifted or are borrowing the deposit (like me) then it is a good idea, if possible, to have this money transferred into your account at least 6 months prior or this will limit which banks will lend to you.
When applying for a loan it is definitely best to have no debt. This also means credit cards. The less credit you have the better. Even if your cards have a 0 balance they are counted as a liability.
There are a fair few documents that need to be supplied to the bank when applying for a loan so it is a good idea to have a digital copy ready to go for the following documents……
– Photo identification (drivers licence / passport)
– Your 3 latest payslips
– Last year’s tax return
– A letter from your employer (not essential but helpful)
– A letter from Centrelink showing any family tax or pensions
– 3 months’ worth of bank statements for each account (make sure your name is visible on these)
– Latest statement for any other loans, credit cards or hire purchases
– Latest statement for any shares, stocks or superannuation
There are of course additional documents for each individual. If you have investment properties you will need to supply a rates notice or water bill and the latest rental statement. If you are purchasing a new home and your existing home will then become your investment property you will need to provide a rental valuation on that property. If you are self-employed you will need to provide 2 years’ worth of Tax returns for yourself, the company and the profit and loss statement.
Most of us will qualify for lending – it is just about being prepared and organised. If you need ANY advice on all things financial or property get in touch with us here at Blue Wave Property Strategies so that we can help you ride the wave to wealth!
Contact either myself (Bianca) or Chris if you want to have an informal chat on anything mentioned above.