What do I need to provide to get a mortgage?

Do I need to provide my tax return when I apply for a home loan?

Discovering the mortgage requirements home buyers need when applying for home loan applications has never been easier. Mortgage House has a range of resources and calculators that are designed to give you all the information you need, not just the information banks and lenders think you need. Whether it’s which mortgage documents to provide, how your credit history can impact your application or what your borrowing power may be, you’ll find all the information you need online.

One question that often is asked by would-be home buyers when working out their mortgage requirements for loan applications is do they need to provide a tax return. While your most recent tax return can be important to have on hand if needed, most banks and lenders don’t require it as part of regular loan applications. If you are a PAYG employee, a few months of payslips can usually suffice to prove your income. However, if you are a casual employee, or a shift worker who regularly earns penalty rates, a tax return can give a bank or lender an indication of your yearly income, not just your standard pay rate. If you are self-employed, however, you may not have access to the same proof-of income documents employees do. That is where our Low Doc home loans can help, and you will be required to produce tax returns as part of those mortgage requirements.

What is a Low Doc home loan?

Low Doc stands for low documentation and these mortgages can benefit home buyers who don’t have access to the level of information banks and lenders usually require. If you are a business owner, a contractor or even a freelancer, a Low Doc home loan may be a suitable option for you. If you are self-employed, you may be asked to produce your past two tax returns.

How does a credit report affect my application?

One of the most important mortgage requirements is to ensure you have a good credit history. No matter how many successful loan applications you have had, or how long you and your family have been home buyers, your credit history can make or break home loan applications. It is one of the first things a bank or lender will look at when you apply, and it is one of the few mortgage documents that you have to go elsewhere to find.

• What is my credit history? Your credit history is the summary of all the credit applications you have had in your life. That can include mortgages, credit cards and even mobile phone accounts and insurance policies. If you have defaulted on any credit, or if you have been bankrupt, that information will also be recorded.
• How does my credit history affect my application? Most banks and lenders have mortgage requirements around a good credit score. Your credit history will be tallied into a credit score or credit rating. The higher the number the more chance you have of meeting your mortgage repayments and being successful in your home loan applications.
• How do I know what my credit score is? All your credit history, including your score, is held by a credit bureau. There are few different credit bureaus in Australia. Track one down and ask for your credit history information. You can request it about once a year or within a few months of making a credit application

It is important to remember, as your credit history is one of the more significant mortgage requirements, the final score may also be based on other variables. Some companies may have different scoring systems than others, so keep that in mind.

How can I discover my borrowing power?

While banks and lenders have mortgage requirements and need certain mortgage documents for loan applications, some of the most important information can come before you apply. And it is information for you, not necessarily for the banks. Finding out your borrowing power before you even make loan applications is one of today’s home loan luxuries. In fact, it can be one of the mortgage requirements that can give you an idea of how much to apply for. Finding your borrowing power means you can get an indication of how much a bank or lender may lend to you. It is a good way for home buyers to get an indication of how much they may be able to apply for, while lessening their chances of loan applications being rejected. And it is also a great way to guide you on your property search. It can help you narrow, or expand, your budget and the kind of house to buy or area to buy in. Make sure you enter all the information below as accurately as you can, and your borrowing power will be revealed. The Borrowing Power Calculator will also give you an idea of how much your monthly repayments will be and how much interest you may pay over the life of the loan.

What is debt-to-income ratio and how can I keep it low?

Debt-to-income ratio is one of the things a bank or lender will look at closely when assessing whether home buyers’ mortgage requirements are suitable enough to approve their home loan applications. The debt-to-income ratio is something most Australian home buyers, while they may not have heard the jargon before, know about. We all know how much we earn each week, fortnight or month. From that, we pay for groceries, transport and other regular expenses. Income is also spent servicing debt, whether it be a mortgage, a personal loan, credit card bills or even student loans. Banks and lenders will want to know all these details when you lodge loan applications, because it gives them an idea of your debt-to-income ratio. The ratio is a formula that shows banks and lenders your monthly debt as a percentage of your gross monthly income.

If you have debt repayments each month of $2500, and have a family monthly income of $9000, then your debt-to-income ratio is nearly 28%. It is important to keep your ratio low, because if your financial situation changes, or interest rates rise, and your monthly mortgage requirements increase significantly, then you may struggle to make your mortgage repayments. Speak with our lending specialists if you think your debt-to-income ratio may be too high. Refinancing your existing debt may be a way to lower your debt-to-income ratio. Working on your budget, and making your income goes further is another way. Mortgage House’s Budget Planner Calculator below is a great place to start. It lays everything out for you in a clear way, highlighting your overall financial situation and giving you a picture of where you might be able to make savings. Be honest with the information you enter to get the best results.

What mortgage calculator options can I use to find out more?

While banks and lenders have mortgage requirements for all home buyers when making loan applications, home buyers also want a range of information from financial institutions before applying for a home loan. And Mortgage House wants you to have as much as possible. We make information available that you tell us you want, not what we think you need. Our mortgage calculator options can give you the information you need to apply for a suitable home loan, once you have all your mortgage requirements in order. They include:

• Borrowing Calculator. Find out how much you may be able to borrow, and how much your mortgage repayments can be.
• Mortgage Repayment Calculator. Discover how much interest you may pay over the life of the loan, as well as what your repayments may be.
• Best Rate Calculator. Fill in the type of loan, and interest rate, you want, how much you want to borrow and how much the property you want to buy is worth, and we’ll list the best Mortgage House interest rate options for you.
• Switching Mortgage Calculator. Work out how much you might be able to save when you switch home loans.
• Stamp Duty Calculator. How much home buyers pay for stamp duty can vary depending on where you live, what kind of home loan you choose and the type of property you are looking to buy. This calculator clears it all up.
• Budget Planner Calculator. Receive a clearer picture of your overall financial situation.

Where can I find the best home loan rates?

Whatever your mortgage requirements are, Mortgage House can help home buyers find a suitable mortgage. Most Australian home buyers start with interest rates when deciding which kind of home loan to choose, but the best place to start can be by working out what kind of interest rate you are after. There are two:

• Variable interest rate. A variable interest rate home loan means your interest rates can increase or decrease over the life of the loan, influenced by a range of internal and external factors.
• Fixed interest rate. As it sounds, a fixed interest rate home loan means your interest rates will be fixed for an agreed period, usually between 1 and 5 years.

When you have weighed up the options against your home mortgage requirements, Mortgage House’s Best Rate Calculator can be a great place to go next. It will help you sort through all the Mortgage House home loan options, giving home buyers a clearer picture of what is available.  You can also choose five Mortgage House loans at once to directly compare interest rates, features, loan purposes, fees and charges, and repayment options.

How can an offset account help me?

An offset account can be a big benefit to home buyers and can save you a lot of money over the life of your home loan. Finding a way to limit interest is one of the main mortgage requirements for most Australian home buyers, and an offset account can do just that. All you need is a non-interest-bearing bank account with some savings in it, and you can make further savings yourself. Interest will be charged on the difference between the two accounts, not just the mortgage account. If you have an offset account with $50,000 in it, and a mortgage of $450,000 then you will only be charged interest on $400,000. You can access your offset account whenever you want, for whatever reason, but be aware that the interest amount will change accordingly. An offset account is just one of many features that can help home buyers, and it is important when you are making loan applications to work out which features may be suitable for your mortgage requirements. Other features can include:

• Additional repayments. Make additional repayments and save thousands, without being penalis
• Redraw. Withdraw any extra repayments or lump sum payments whenever you want.
• Loan portability. Take your home loan with you when you move house.