Page 17 - Smartline eBook - First home buyer

Applying for a home loan
Applying for a home loan doesn’t have to be daunting. In fact, if you know what a lender is looking for in advance, the process can be smooth and efficient, and could take very little time.
With that in mind, here’s what any lender will usually want to see before approving your home loan.
1. Income
First and foremost, a lender will want to know that you have the capacity to repay any loan they give you. If you’re an employee they’ll usually ask you to prove this by providing payslips, bank statements showing your salary being deposited, or a letter from your employer.
If you’re self-employed they’ll ask for your accountant’s details and your last two years of financial statements, as well as your personal tax return and company tax return, if you have one.
If you receive money from other sources – such as rental properties, shares or government payments – you’ll also need to provide evidence of this.
2. Evidence of what you own
A lender will always want to see evidence of any assets you hold. This may include your superannuation balance, bank account details and a list of any shares, property or other assets in your name.
3. Savings history
Some lenders will also want to see that you have a history of saving money. That’s because they believe having the discipline to acquire “genuine savings” means you’re more likely to have the financial discipline needed to meet your ongoing repayments. Each lender will have its own definition for what qualifies as genuine savings and how long you need to have held onto the money for before applying for a loan.
4. A sound credit history
Lenders will always look at your credit history before they provide you with finance. Your credit score is a mark out of 1,000 and is based on your history of paying loans and bills, as well as how often you’ve applied for credit. This takes into account all of your credit cards, even if you don’t owe money on them,
as well as details of any other debts you have. If you’ve ever been declared bankrupt or have any judgments against you, this can have a serious impact on your credit score.
5. Your expenses outside of the home loan
A lender will also take into account your living expenses. This includes providing details of what you spend on groceries, eating out and other day-to-day expenses, as well as ongoing costs such as utilities, childcare or education, insurance premiums and more.
First home buyer guide 17