Loan Application Documentation Checklist

Making sure your loan application details are in order before you apply is obviously important. This is important for many reasons, not the least because it is worthwhile thinking beyond the application stage. If your application is accepted, you enter into a contractual agreement to pay it back. Thinking about what happens if your loan is approved is one thing, but thinking about what happens if your application is rejected is another. Having a loan rejection on your credit history can be a red flag for future loan applications. So, it’s vital to ensure your loan application is as complete as possible before submitting. It’s also important to be realistic about your loan application, especially when it comes to income. Put yourself in a lender’s shoes. Take a look at our borrowing calculator to get an indication of how much you might be able to borrow. From there you can get an idea of whether your income is sufficient to pay off the loan you are applying for. Speak with our expert lenders, who can do some quick calculations and give you a further indication of your chances of success. So, make sure your income statements are accurate and make sure every other aspect of your loan application is correct. Double and triple-check it just to be sure.

One of the key parts of proving your income when applying for a loan is your payslip. Most banks and lenders require at least your two most recent payslips and some documentation from your employer outlining how long you have worked in your current job. It can also be important to have documentation that outlines how much overtime you have done in the past year and any extra allowances. It can be especially important if you are a shift worker and often work extra or irregular shifts. It can also be important if you are, for example, a nurse, and have regular 9-5 hours in one part of the hospital, but often take extra shifts in another section, at odd hours. In this case, it can be important to show your full income, even if it means going back over the current financial year. But what happens if you are self-employed, or a contractor or freelancer and are unable to provide the regular income documentation? If that’s the case, make sure you have the past two financial years’ tax returns available, so banks and lenders can see a pattern of income, as well as your most recent Assessment Notice. Some lenders may also require profit and loss statements. It may be recommended you apply for a low doc loan, which can have less paperwork requirements. But, you will still need a good credit rating.

If you are buying an investment property, banks and lenders may want to see a copy of the lease with the current tenants, or at least a letter from the property manager outlining the estimated rental income of the property you want to buy. And if you already own an investment property, make sure you have evidence of the net rental income on hand. This is an important part of you presenting your income for a loan application.

It’s also important to have the details of your personal or car loan available if you have one. Providing the most recent statement can let the bank or lender know exactly what your repayments are, and how much of the loan you still have to pay off. Something that might be worthwhile if you are applying for a mortgage is to refinance the personal loan into our mortgage amount. This can save you money, given a mortgage can be for as much as 30 years. You can save on interest, and you may hardly notice the extra repayments as part of your mortgage.