Home loan applications: Stay calm and do the paperwork
You’ve found the home you want and your offer has been accepted – now all you need to finalise the purchase is an answer on your home loan application.
And you’ve already assembled a ton of paperwork for the application, from payslips and employment letters to bank statements, tax returns and expenditure declarations, so you’re pretty confident that answer will be “yes”.
But things don’t always work out the way you expect, says Shaun Rademeyer, CEO of Betterlife Home Loans, SA’s biggest mortgage bond originator. “Even if your credit record is great, you can be turned down for a loan because of inconsistencies or gaps in your documentation.”
You might have forgotten to mention, for example, that part of your stated income is derived from a second job. Or if you are buying the property with someone else you might have forgotten to detail their monthly expenses.
This might seem trivial to you, he says, especially if you believe you will have no trouble making the monthly bond repayments. It is also much less likely to happen if you apply for your loan through a mortgage originator such as BetterLife Home Loans, which has experienced loan officers to advise you upfront about what the different banks may require when assessing home loan applications – and about what further legwork may be required.
“However, aside from assessing the risk in each loan, lenders also have to apply very strict rules to ensure that you will not become over-indebted if they grant you a bond, and are thus entitled to double check anything that raises the smallest red flag.
“At that stage they will most likely also ask for more documentation or evidence to enable them to decide if you will manage the instalments – and our advice to prospective borrowers is just to co-operate and try to provide whatever additional paperwork is requested, whether it is more bank statements, proof of the source of your deposit, or detailed financial statements if you are self-employed.”
The bottom line, Rademeyer says, is that the lender would not be asking for additional information unless it was necessary to complete the approval process.
“The banks are relatively keen to approve new home loans at the moment, but a quick denial will nevertheless be forthcoming if you get hot under the collar, refuse to provide what they have asked for and insist that they evaluate your application using what you have already provided.
“Basically, you are asking for someone to lend you money to buy your home, and you need to be prepared to dot the I’s and cross the T’s until they are convinced that this a good idea.”