What Do You Need When Applying for a Home Loan? Your Essential Checklist

Article summary:

• Home loan application requires a good credit record.
• Most home loans require a 10% upfront deposit.
• Getting pre-approved will provide you with an estimation of what you can afford.
• Applying to multiple banks with ooba Home Loans gives you the best chance of securing home loan approval.

Buying a home is an exciting step in your life. You have the chance to obtain something that’s not only an invaluable financial asset but a precious personal investment

Of course, in order to obtain a home, you’ll usually need a home loan to fund the purchase.

But don’t be put off by the home loan application process. Doing your research will ensure the process goes smoothly.

We provide a guide to applying for a home loan, with information that will help you conduct the process in as quick and easy a manner as possible.

What do I need when applying for a home loan?

1. Pre-approval.
2. A signed Offer to Purchase
3. A good credit record.
4. The necessary documents.
5. A deposit.

1. Pre-approval

The pre-approval process will provide you with an estimation of what you can afford.

Getting pre-approval is highly recommended as it will enable you to house hunt within your price range, and you will be confident that you can afford the home loan for properties in said price range.

You can provide proof of pre-approval to the bank, granting you a higher chance of home loan approval.

How do I get pre-approved?
You can get pre-approved by contacting an expert at ooba Home Loans or by using our free, online pre-approval tool, the Bond Indicator.

2. A signed Offer to Purchase

When you’ve found the house you want, you make an Offer to Purchase which must be signed by both the buyer and seller.

This essential document dictates the terms that the buyer and seller must fulfil before the sale can go ahead.

As a buyer, you need to ensure you’re protected by the document. For example, you’ll want a clause that requires the seller to conduct a home inspection and inform you of defects.

You may wish to employ an estate agent or attorney to advise you on the process.

You’ll need a copy of the signed Offer to Purchase when applying for a home loan.

3. A good credit record

Your credit record is the main factor banks will assess when determining whether to improve your home loan. It’s a three-digit number that summarises your financial situation.

What is a good credit record?
You need a credit score of at least 610 for the bank to consider your home loan application, while anything above 661 is considered a decent credit score.

Here’s a more detailed breakdown:

781 to 850. Excellent.
661 to 780. Good.
610 to 660. Fair.
500 to 610. Poor.
300 to 499. Very poor.

Improving a low credit record

If you fear that your credit score is too low for bond approval, you can take measures to improve it.

Measures include paying outstanding debts, closing accounts, and limiting requests for new credit.

You should also keep your credit ratio (the gap between the amount you owe and the limit to your credit) below 30%.

Changes to a credit record will usually show up in six months.

How to find out your credit record
You can find out your credit score by getting pre-approved with ooba Home Loans. The process includes an assessment of your credit score.

Give yourself the best chance of home loan approval
With the help of ooba Home Loans, you can apply to multiple banks. Competition between banks is strong and some may be more willing to grant home loans than others, even for customers with a low credit score.

So apply with ooba Home Loans for the best chance to secure home loan approval.

4. The necessary documents

You’ll need a collection of documents when applying for a home loan. Here’s a list to help you prepare:

• A completed and signed application form.
• A copy of your ID document.
• Proof of residence.
• A copy of the offer to purchase containing both the seller and purchaser’s details (not necessary for pre-approval).
• Proof of income. You will need to provide a salary slip (not older than two months), or a letter from your employer with a breakdown of your salary and deductions. If you are self-employed then you will need a letter from an accounting officer confirming your income, or a statement of your assets and liabilities.
• Six months’ worth of bank statements.
• A copy of the marriage certificate (if married).

If you find the idea of preparing all these documents intimidating, one of the benefits of applying with ooba Home Loans is that we will help you prepare and submit the documents.

5. A deposit

You’ll need to make an upfront payment in the form of a deposit, which usually amounts to 10% of the purchase price.

If you’re able, you can make a higher deposit. This is always recommended as it grants you a higher chance of approval and will earn you lower interest rates.

You may need to spend some time saving for the deposit. You can use our Deposit Savings Calculator as a guideline for saving for a deposit. The calculator will estimate how much you should save per month to reach your deposit goal.

Can I get a home loan without a deposit
There is the option for a 100% home loan, which removes the need for a deposit.

Banks are more likely to grant a 100% home loan in the current climate as competition to secure customers is strong.

ooba Home Loans reports a 68% increase in 100% home loan applications, and 80% of our 100% home loan applications are being approved.

A 100% home loan means higher interest and repayments, but it removes a major barrier for first-time homebuyers.

Applying to multiple banks with ooba Home Loans improves your chances of securing a 100% home loan.

Get the best deal on your bond

If the above guide has motivated you to apply for a home loan, note that, as mentioned above, applying to multiple banks with ooba Home Loans gives you the best chance of home loan approval.

Applying to multiple banks also allows you to compare the packages they offer and choose the one with the best interest rates and home loan terms.

So when you’re ready, apply with ooba Home Loans to secure the best deal on your home loan.