How to have a Smooth Loan Application
A home loan application process can be a painful and inconvenient ordeal or it can be a smooth and trouble-free experience that just unfolds naturally. Most of us prefer that second option.
Applying for a home loan is a big deal for most people, and it needs to be put into perspective. There are a lot of things you’ll need to prove, whether you’d like to or not. From the bank’s point of view, when they lend money, they are making an investment. It can be strange to think of it that way. Because you are their investment, they have to assure their shareholders that they’ve made their decision to lend to you based on sound reasoning.
So the big point is this – a bank won’t take your word for anything. Don’t take it personally. And further, unless they’re quite sure about all the different aspects of your application, they won’t lend to you. Resistance to this fact is surprisingly common, so in the interests of ensuring that you do have a pain-free experience, there are a number of things you can do to help yourself.
Preparation is key, so if you can put things in place months ahead, that’s perfect. Think of a three month horizon for your application – make sure that in the three months prior to you applying, your banking and bills and debts repayments are all crystal clean. Six months would be better if possible.
You’ll need to show your bank statements and loan or credit card statements, so no dishonours or going into the red. They’ll also need to be printed style statements – that is, they should show your name and the account number, which can be hard to get with online statements, so you may need to go into a branch. Also, start saving, if you haven’t already. They all like to see savings, although you don’t necessarily need savings to get a loan, depending on the lender.
For employees, the longer you have been employed at your current job, the better. Banks love stability. If you’re going to change jobs, you’ll need to be staying in the same industry, or else the banks will normally want 3-6 months of history at your new employer. Payslips are always needed, and these must show the employer’s name and should show Year-To-Date figures, especially important for casual employees. It often helps to have tax returns or your payment summaries or group certificates as well, so collect what you can.
Your ID forms should be clear – if you don’t have a passport, have your birth certificate ready to go.
Lastly – don’t apply for finance of any kind while you have an application in progress, for example, you have a pre-approval on your home loan, and then decide to get a store card. This can stop an otherwise positive application dead in its tracks.