What do I need to get a loan?
In simple terms, anyone who lends you money will want to know that:
- You are who you say you are
- You can repay the loan
- They can recover the money from you if you stop making payments.
While it seems straightforward, using a broker, like Rob McDougall at Loan Market in Townsville, can make the process easier. And if you have any unusual circumstances, Rob can present your information to the lender in a way that addresses the questions they are likely to ask.
Are you who you say you are?
This bit is easy. Whether you go direct to your bank or use a broker they will ask for three pieces of ID – just as if you were opening a bank account. If you are approaching the institution where you already do your banking then they may consider that they already know you.
Can you repay the money?
This is not necessarily a question of whether you have a job, although in the box ticking exercise of filling out a mortgage application, a job and a few payslips are the quickest way to provide proof of your income. However, you may also have income from other sources – like shares, a pension, a compensation payout or rental property.
This is where Rob McDougall can be invaluable. He will know the most effective way to present you to the most suitable lenders.
Whatever your source of income, you need to provide evidence that there is money coming in. For a standard job: payslips. If you are self-employed, the potential lender may want to see your books. For money earned from rental properties, they will want to see a rental agreement and evidence that rent is being paid – usually rental statements from an agent, bank statements showing regular payments or both. If your rental property is overseas, or you are paid an income from a business you don’t work in – like a family business you part-own – then a Loan Market broker can help you to present yourself effectively. Or he can steer you towards a different lender, or loan, that better meets your needs.
Can they get the money out of you if you stop making payments?
For a mortgage, the lender will want to know some key things about the property:
- The address and description of the property you intend to buy
- The amount of deposit you are putting down
- That the conveyancing will be done professionally, so it is certain that ownership transfers to you when you buy it
- That the property has been maintained in a reasonable manner
- That the property will have insurance to cover damage or loss.
Again, Rob can ensure the right information is presented to the potential lender in the right way.
If the loan to value ratio (LVR) is high (you are borrowing a large proportion of the value of the property, compared to your deposit), the lender may ask you to pay mortgage insurance. This isn’t to protect you if you default on the mortgage, it’s to protect the lender. Talk to Rob about the impact of mortgage insurance on the size of your debt and repayments.