Australian Mortgage and Loan Information

A home loan mortgage finance application can be tricky, so it is important that you have all your personal and financial information ready before you meet with your mortgage broker.

Personal Information:

The first thing you need to do is prove who you are. Chances are your home loan lender is going to be advancing you many thousands for your property purchase, so they want to be sure you are who you say you are. You will need the obligatory 100 points of identification if you are going to secure a home loan or mortgage. You will need: Birth Certificate (certified if applying for first home owners grant) or Passport, drivers licence, Medicare card, credit card statements, maybe an account from a utilities provider with you current address, some other photo id and maybe a letter from your mum. You will also need to provide details of where you have lived for the last 5 years or so.

Financial Information:

If you are an employee, you will need at least your last three payslips that clearly identify you and the amount you earn. A letter from your employer may also be useful here if they are willing. They will need to state your employment start date, gross income and condition of employment as a minimum. You may also be asked to provide your PAYG Payment Summary for individual non-business. If you have more than one employer get a statement from them all. If you are self employed you will need your last two years tax returns and assessments for yourself and any other tax entity you trade under. Self employed applicants may also be able to use Low Doc or No Doc options to certify their incomes.

You will also need at least 6 months of saving account statements to show your savings history, lenders think a solid savings history indicates that you will be able to make the sacrifices necessary to keep up the payments on a home mortgage. In some cases 6 months of credit card statements, including the most recent, showing their balance and limit. Personal loan details and statements showing repayment outstanding balance figures and payment history. Store account statements and details.

You will also need paperwork explaining any bad credit history you may have. It is best to get this stuff up front to avoid any delays with your application. Contact a credit reference supplier and find out if you have anything to worry about if you are not sure.

If you are buying a property you will need to supply a Contract of Sale. The front page of a Contract of sale is generally enough for most of the major lenders. If you are refinancing, you will need 12 months mortgage statements on the loan to be refinanced and a recent council rate notice. If you are building it will be best to supply a complete copy of your building contract including the specifications and plans.

That’s just about it. You will also need your notepad or diary to take notes from your mortgage broker interview. I suggest you print this Blog and use it as a reminder. Oh and tell your mum you love her and that you appreciated all the times she cleaned up after you!

PS: Be prepared, get some mortgage checking software.

Do you know the shocking truth about borrowing from a bank……

Over half of monthly bank statements contain errors!

Whether you deal with a mortgage broker, or one of the major lenders, have a standard variable home loan mortgage, fixed rate home loan mortgage, construction loan, line of credit home loan, debt consolidation home loan mortgage, credit card linked home loan mortgage, offset account linked homeloan mortgage, split home loan facility, reverse mortgage, homestart home loan mortgage, one year discount variable home loan, low doc home loan, no doc home loan, investment property mortgage, first homebuyers mortgage, first home buyers home loan and so on, you need to be diligent and on alert for loan statement errors. Check the historical rates over the last 40 years, you will see there are many opportunities for major lenders to make mistakes.

It has happened to me. My bank overcharged me, so………….

Never accept the repayments specified by your lender as being correct.

In November 2005 the National Australia Bank (NAB) admitted it had been overcharging 50,000 customers for about 13 years and that it was going to hand back $21.6 million dollars. In this instance the overcharging mistake largely affected business customers with fixed interest rate loans.

If you have a home loan with any lender including the major one’s like NAB, Westpac, CBA, St George, ANZ and Members Equity there is at least a 50% probability you may have been overcharged. Lenders do what they can to limit mistakes, but errors still occur.

I use Mortgage Watchdog, mortgage statement checking software to check my statements. It has served me well.

The banks do not want you to use this software because of the refunds they have had to make to users. If you have an existing mortgage then it will pay you to buy this particular mortgage calculator instead of using the free bank calculators. Not only can you do “what if” scenario’s but you can check whether the bank has been ripping you off with your existing mortgage and get a refund. More on the super Mortgage Calculator and Checker here…

The software has been seen on…
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The Home Deluxe Bundle consists of the following programs:
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3. The Mistake Compounder (calculates what a bank error at some time in the past is actually worth now)
4. The Home Loan Forecaster (allows you to determine what your repayments would be at different interest rates, payment modes and loan amounts)
5. The Offset Account Checker (calculates the interest on your savings account that should be offset against your mortgage account)
6. The Effective Rate Converter (shows the “true rate” that your lender is charging

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Be your own mortgage coach, help your familiy members, but check your statements.

RESERVE BANK LEAVES OFFICIAL RATES ALONE FOR NOW!

Thank you Reserve Bank Board, you have made one aussie mortgage battler’s month by not raising official interest rates. The spin from the media is there may even be a drop in rates in the near future if inflation drops a little. A lower oil price will have a domino effect on inflation, so a rate drop is a real possiblility. But, will the Banks and other lenders put rates on hold?

Most major mortgage lenders have increased the rate on their variable home loans by between .10% and .15%. on top of the RBA increases. They claim it is because of funding costs. I quote Ross McEwan, of the Commonwealth Bank, group executive retail banking services: “The sub-prime crisis – which was sparked when US lenders lost billions of dollars on bad loans – means the cost of sourcing money has gone up. Basically, banks need to pay more for the money they borrow to lend to consumers. The bank continues to balance the needs of its shareholders and customers by not passing on the full impact of the increased funding costs to borrowers and as a result has seen the margins on its home loan business decline significantly in the last year, The Commonwealth’s rate rise means payments on a $300,000 mortgage taken out over 30 years will rise by about $7 a week.”

However, my observation has been that deposit interest rates have maintained their correlation with official rates. If the banks are having trouble raising funds in the overseas credit markets, I would have thought they would try and raise their funds at home by offering more attactive deposit rates. It seems mortgage holders continue to bare the brunt of the worlds financial problems. I for one will be trying to eliminate my mortgage as soon as possible, so I do not have to worry about being treat badly by lenders. I suggest you do the same. A few sacrifices today, may well mean the difference between baked beans and steak in the future.

Owning a home outright, provides a fantastic feeling of achievement and an increased sense of self-worth. That feeling is worth every moment of mortgage stress endured.

P.S. Dont forget to check your mortgage statements. Lenders make mistakes, please keep them honest.