No one likes paperwork; however, providing your broker with the right documentation will save you time and money.
What information will your broker ask you to provide?
When you ask to enlist the services of SFE Loans, they will probably ask you for the following documentation:
- Identification, including photo ID such as driver licence
- Income verification documentation such as recent payslips
- Birth certificate, if you are applying for a government funded first home owner grant
- Bank statements to verify income AND declared living expenses
Depending on the lender or bank you choose for your broker to apply to for your loan, you may also be asked to provide:
- A recent PAYG summary
- A notice of assessment from the Australian Taxation Office
- Tax returns
- Proof of your contribution toward the transaction, such as savings or deposit statements
- Purchase contracts for a home loan, including building contracts, or plans if building
Why is this information important?
While it may seem that you are climbing the Mount Everest of paperwork, SFE Loans will ask for all of this to ensure they are protecting you and that they get the best possible deal.
“Brokers are required to do a Fact Find and confirm your Needs and Objectives for obtaining finance. To achieve this, various forms of documentation are required for both a Broker’s Credit Licence but also the Banks Credit Department,” explains Mortgage Planner Sarah Eifermann from SFE Loans.
This is the process by which brokers ensure that they match a client with a loan that helps them achieve their property goals, whether that is buying a home to live in, one to renovate and sell, or a long-term investment, and one that matches their financial positions. “Brokers are required under Law to ensure prospective loan clients are not placed into a situation where they cannot afford to repay their new loan commitments,” says Eifermann.
Will a bank ask for the same documentation?
If you apply for a loan with a bank that you do not currently have an account with, they will require much of the same information as SFE Loans would.
Although borrowers may be able to avoid the paperwork by applying for a loan with their current bank (which will already have a lot of information on file), this means being constrained by the products that bank offers and risking missing out on a great deal.
In the current climate of lending and compliance, highlighted again by the Royal Commission, SFE loans would still need the full list of documentation to comply with their obligation under the NCCP Act for Responsible Lending.
“The benefit SFE Loans has compared to an individual bank, is the broker has access to most banks and lenders across Australia,” Eifermann says. “Lending policies and pricing vary greatly across the lending market and some clients do not realise this, so why waste time going direct to a bank?”
It is also likely to mean missing out on having SFE Loans match a loan to longer-term goals, rather than just a purchase price and interest rate.
Saving you time and money
Eifermann says SFE Loans can usually tell a client within 10 minutes whether they have a chance of obtaining loan approval provided all documentation is made available to them.
“Broker’s offering comes from having access to bank loan affordability and serviceability calculators, which show clients’ potential borrowing capacity; as these differ across the differenct lenders” she explains. “Plus, depending on the size of the funding required, and the loan to valuation ratio, the banks are extremely competitive with each other, and we can quite often get a better price deal than advertised.”
If a client is not yet in a position to obtain a loan or has a credit issue on their file, such as a default, having SFE Loans on-side can be invaluable.
“We can guide the client with a view of getting default removed, or waiting until the default drops off the client’s credit file,” Eifermann explains. “Most brokers are accredited to gain access to client’s credit files these days, which is an extremely important issue due to the banks’ risk scoring. However we advocate for clients to personally obtain their credit files, as then no official enquiry is made; as every enquiry can affect your bank credit score”
In a nutshell, SFE Loans will shop around to get the best possible deal for you, the client.