What repeat buyers need to know about home loans
Category Property Advice
The dynamics of the real estate market are in constant flux, and homeowners across various life stages often find themselves making crucial decisions about their properties - whether they are downsizing or upgrading.
Whatever your reason for selling your home, the majority of repeat buyers will need a new home loan in order to put their plans into action - and most will find that the application process has changed considerably since they last went through it, especially if that was more than 10 years ago. In this article, we'll explore the evolving landscape of home loan applications and offer guidance for repeat buyers seeking to make a seamless transition.
The changing home loan application landscape
The application process for home loans has evolved substantially, especially for repeat buyers who may not have experienced these changes in over a decade. The National Credit Act has introduced more rigorous scrutiny of factors like debt, income, and monthly expenditure to prevent consumers from becoming over-indebted. While banks are eager to lend, responsible lending practices necessitate a thorough assessment of a borrower's financial situation.
To help you navigate the process we advise that you enlist a home loan originator. They will be able to not only get you pre-qualified but also help you apply to all the major banks when you are ready to buy your dream home.
Preparing for a smoother application process
Repeat buyers can play an active role in expediting the application process by providing thorough and accurate documentation. Here's a checklist of essential details and documents to prepare:
Personal Details: Include full names, ID number, tax number, date of birth, phone numbers, marital status, number of dependents, educational background, current address, and length of stay. Support these details with hard copies of relevant documents, such as ID book, marriage certificate, qualifications, tax returns, and a council account verifying the address.
Employment Details: Provide information about current and past employers in the last two to five years. Include the employer's name, address, phone number, position held, and type of work. Support this with documents like appointment letters, job descriptions, and specialized qualifications earned.
Income Details: Furnish gross and net household earnings, accompanied by three months' worth of payslips and bank statements. Document additional income sources, such as overtime, bonuses, commissions, dividends, interest, rental income, alimony, or child support payments.
Monthly Expenditure: Detail existing debts, regular payments (school fees, insurance premiums, etc.), and average monthly expenses (groceries, transport, entertainment). This helps lenders assess discretionary income and affordability. Ensure no debts, even small ones, are omitted.
Additional Documents: Depending on circumstances, be prepared to provide an offer to purchase, a property title deed, building contract (for plot-and-plan homes), and documentation related to the sale of existing homes. These documents should be very easy to find if you have been keeping a legacy file for your home.
Other Assets: While not always required, disclose additional assets like savings, shares, holiday homes, rental properties, and life insurance policies.
Author: Harcourts Summerton
