Paperwork Requirements

Every home loan application requires a lot of supporting data to ensure that a quick and efficient decision-making process can take place. Banks have a strict checklist when it comes to this, but for self-employed applicants list is substantially longer.

That is not to say that every self-employed borrower needs to provide the same details, instead banks will tailor the list of requirements to each borrower as appropriate. He is a list of items that banks usually require from self-employed applicants in one form or another.

A complete statement of financial position. This means a complete list of assets and liabilities for each applicant and companies where appropriate.

A completed application listing all personal and employment details. This is the name, rank and serial number section that comes with every home loan application.

Specific choice of loan product. Normally this is done in conjunction with the lender or mortgage broker. The choice of loan is an important factor and will be covered in detail later.

Full details of the property offered as security. This simply means the property details of the property to be mortgaged. It usually includes the address, titled details including lot numbers, registered plan numbers and other identifiers such as parish and county.

Signed, dated and witnessed declaration forms. These include the usual signature pages on every application form that gives the bank mission to perform credit searches and to liaise with any agency that will assist in the decision-making process.

The declaration of purpose for the loan. This is where the applicant can decide whether the purpose of the loan is for personal or investment purposes. Where investment or business loans are applied for, applicants do not receive protection under the National Credit Code.

Package application forms. Some banks offer discounted packages and require applicants to complete extra details so that the discounts they are eligible for can be applied appropriately. The banker or mortgage broker will assist in this process.

Letters from Centrelink confirming payment details where appropriate. This includes taxation benefits or other payments made by Centrelink which can be included as income for the loan application purpose.

Guarantor forms. Where the company is the main borrower, the director or other public official applies as a guarantor and this requires signing separate guarantor agreement forms. The lender or mortgage broker will guide you through this process as it can be quite detailed and complex.

Payslips where appropriate confirming at least three months income. The payslips should show a year-to-date figure. Sometimes the bank will also ask for copies of transaction account statements to confirm that wages have been credited to the applicants account.

Tax agent prepared tax returns for the last two financial years at least. Banks are also likely to ask for full financials for the same tax years and may ask for BAS statements to support the application.

Where a trust is listed as the borrower name, the bank will need to see a copy of the trust deed to confirm beneficiary and trustee details.

If a refinance of other banks facilities is involved, you should also provide six months of all current loan statements.

Asset details. In some circumstances the bank may also want to see copies of bank statements showing personal savings or term deposits. But may also want to see details of shareholdings and other real estate holdings to confirm your asset position.

Where funds are being provided from the sale of another property, a copy of the contract of sale should also be provided.

Naturally, not all of these details need to be provided with every application and only the most complex of applications will require everything listed. The lender or mortgage broker will guide you through the process and carefully point out which items you need to provide.

Self-employed borrowers are often daunted by the prospect of having to provide such detail, and admittedly, it can take a lot of time and effort to collate everything. The main issue is usually the provision of tax returns for a least to complete financial years, because most businesses delay the lodgement of tax returns for up to 9 or 10 months after the end of the financial year.

This is normal business practice but it does not suit the bank process that's why accountants are usually engaged to prepare tax returns to support a loan application.

If the borrowings are less than 80% of the property's value however it is possible to take advantage of the low Doc loans offered by some lenders. This means that applicants are exempt from having to prove income and are able to simply provide a statement to the effect that they are aware of their responsibilities and can comfortably make the loan repayments without financial difficulty or hardship.

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