Evidencing a loan

Requirements for a Full Doc Loan

This type of loan is the more conventional style of loan and is more commonly used in mainstream banking.

This type of loan has been around in one form or another since banking began. When applying for this style of loan the applicants will need to supply all relevant financial details on themselves, their Financial Status, Income, Assets and Liabilities, complete property details including rental income and outgoings on the property.

In more detail these include:

Income verification

Rental income - new & existing

Liability proof

Ownership proof

Identification

Contract

Proof of funds

Buying in a structure

Pay Verification PAYG ( Pay As You Go) income earners will require two recent pay slips and the most recent year’s group certificate or a letter from their employer stating length of service, base wage and any regular overtime or allowances paid.

For Self Employed applicants, the banks will require usually two years (but sometimes three years) Business Tax Returns, as well as Personal Tax Returns for the same period.

For Part Time and Casual Employees the requirements are usually that they need to have been employed in the same position for at least two years. Most financiers will usually then take the average of the two year’s income.

Rental Income Evidence (usually either rental statements or a letter from a managing agent) of rental income on any existing properties as well as estimated or existing rental income from the property the applicant is purchasing; usually a letter from an agent stating estimated rental returns is sufficient.

Liabilities / Ownership Bank statements and rates notices on all existing properties will need to accompany your application. This shows the financiers three things:

i) How much is outstanding on any existing loan?

ii) How well you have been paying your existing loans and whether you have had any late payments of defaults on the loans?

iii) The rates notices are evidence of proof of ownership and to show that the rates have been paid and are up to date. Usually, at least six months of Loan Statements and Credit Card Statements will have to be submitted. Identification If you have not dealt with a particular Bank or Financier before you will need to supply a 100 point identification check for all parties in the loan application. This is the case whether you are opening up a savings account or applying for a loan. To give you an example:- · A Passport or a Birth Certificate is worth 70pts · A Drivers licence is worth 40pts · A Medicare Card 35pts If the applicant is a married female that has adopted the husband’s name and is providing a Birth Certificate, it will have to be accompanied by a Marriage Certificate. Contract The financier will also require a copy of a fully executed (signed) contract for the purchase of the new property. Proof of Funds When purchasing a property, you will have to show the financier that you have the funds to complete at settlement. What this means is that you have enough money in your bank account or Line of Credit or available equity in other properties to cover the 20% or 10% that is not being borrowed on the new purchase, as well as associated costs such as stamp duty, legal fees etc. For example: if you are purchasing a property for $250,000 and looking to borrow 80% (that is $200,000) and the costs including legals and stamp duty amount to $8,500, you would have to be able to show the financier proof at the time of application that you were able to contribute the $58,500. Using available equity in a Line of Credit is quite acceptable. However, using a credit card would not be as favourable. It would be better to have the cash in a savings account and the credit card limit fully extended, than to state that that is where the funds are to come from as the credit card limit will be taken into account in your application even if it is unused. If the applicant is a First Home Buyer, most banks and financiers will take into account the First Home Owners Grant as money towards settlement completion.

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