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What documents do you need for pre approval

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What do you need to get pre-approval?

When in the process of applying for a home loan or car loan, it’s easy to lose track of exactly which documents you need to apply for pre-approval - but this step is important to get right as it’s proving your financial capability and stability. So here’s a checklist of what you’ll need for the mortgage pre-approval process:

Proof of Employment and Income

If you’re looking to get pre-approval for a mortgage, having a regular source of income is essential. Your lender will want to see that you are steadily and consistently employed, as well as that you are paid regularly. Being an employee of the same company for a prolonged period of time will also be seen favorably.

The pre-approval process may be different for those who are self-employed, as you’ll need to prove that you’re financially stable by providing documentation from your business and/or any freelance activities even though you’re not an ordinary employee. You may be required to provide:

  • 2 years of personal tax returns.
  • 2 years of personal tax assessment notices.
  • 2 years of company/partnership/trust tax returns.
  • 2 years of financial statements (if available).

Proof of Savings

Lenders want to have reassurance that a mortgage seeker is sensible with their finances and has a pattern of making good financial choices. Therefore, a lender may ask to see your bank statements over the past three months, to access how your money flows in and out of your bank account and identify any alarming patterns that could affect the mortgage repayments. If a lender can see evidence of your deposit like a bank statement, this will be seen favorably.

Proof of Current Debts

Lenders take pre-existing debt into consideration when determining whether you are a good candidate for a loan, so it’s important to be honest when declaring any additional debts you may have. Therefore, it’s best to supply the lender with a recent credit card billing statement as well as other loan statements to ensure that the lender has the entire picture in regards to your finances and expenses. You’ll also need to provide one statement which can be in the form of either an E-statement or a mailed copy, usually both are accepted.

Proof of Assets

It’s important to declare any other assets to the lender. For example if you have other real estate properties you can show evidence of your ownership by providing a council rate or a recent rental statement for the property.

A completed application form

Once you have all of the required pieces of documentation together, it’s important to double and triple check your application form and sign it. Ensuring that all areas are filled out correctly and that all supporting documentation is attached will give you peace of mind when handing the application over to your lender. Once your lender has looked into your income and expenses and provided everything has gone well, you start the process of looking for a new home. Most pre-approvals are only good for three to six months so it’s important to act quickly if you see something you like.

It’s important to remember that getting pre-approval for a mortgage doesn’t guarantee that you’ll get unconditional approval from your lender for a property. Your lender does have the right to then refuse your application depending on the property you are interested in purchasing - say if it doesn’t meet their property standards.

However, once a lender has granted you a formal pre-approval for a mortgage it’s reassuring to know that sellers will take you more seriously as they know a bank is ready and willing to back up your offer with the purchase price.

If you’re ready to inquire about finding a home loan that’s right for you, check out our competitive home loans or chat to one of our lending specialists to help you get into the property market.

About the article

As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.

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