Why does my Mortgage Broker ask for so much information?
Why is my information so important?
While it may seem that you are providing significant amounts of paperwork, a Mortgage Broker will ask for all of this to ensure they are protecting you and that they get the best possible deal for you.
Gathering the various forms of documentation allows Mortgage Brokers to complete a compliant fact find, which is an important part of the home lending process.
This is the process by which Mortgage 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.
Mortgage Brokers do not want to put prospective clients into a situation where they cannot afford to repay their new loan commitments.
What information will your broker ask you to provide?
No one likes paperwork; however, providing your Mortgage Broker with the right documentation will save you time and money.
When you start using the services of a Mortgage Broker, they will most likely 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
Depending on the lender or bank you would like your Mortgage Broker to lodge the application to, 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
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 a Mortgage Broker.
Borrowers may be able to avoid some of the paperwork by applying for a home loan with their current bank, as they will already have a lot of information on file. However, this means being constrained by the products that the bank offers and risking missing out on a great deal.
The benefit a Mortgage Broker has compared to an individual bank, is the broker has access to most banks and lenders across Australia.
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 a Mortgage Broker match a loan to your longer-term goals.
Saving you time and money
A Mortgage Broker can usually tell a client within 10 minutes whether they have a chance of obtaining a home loan approval.
Mortgage Brokers have access to bank loan affordability and serviceability calculators, which show a clients’ potential borrowing capacity.
Depending on the size of the funding required and the loan to valuation ratio, banks are extremely competitive. Mortgage Brokers can often get a better priced deal than what is advertised.
If you’re not in a position to obtain a home loan at the moment or you have a credit issue on file, such as a default - having a Mortgage Broker on your side can be invaluable.
Mortgage Brokers can guide the client with a view of getting the default removed, or waiting until the default drops off the client’s credit file.
Most Mortgage Brokers are accredited to gain access to client’s credit files, which is an extremely important issue due to the banks’ risk scoring.
In a nutshell, a Mortgage Broker will shop around to get the best possible deal for you, the client. They are also experts in finding you a loan that matches not just your finances, but your future plans.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.