Is there a checklist I should follow when I’m applying for my first loan so I can avoid rejection?

Is there a checklist I should follow when I’m applying for my first loan so I can avoid rejection?

Choose a mortgage broker who can help you determine how much you can afford to borrow and which loan is best for you.

Alternatively fill out an application form online or by phone directly with your chosen provider and they will run a credit check on you and grant you conditional approval usually within two business days.

Some lenders will class their conditional approval as official preapproval on your loan, this is something you should confirm.

When it comes time to apply for a loan you will need to provide proof of income, this is usually details of your monthly salary both gross and net, and three recent payslips. You will also need to provide your employer’s contact details, and make sure that you inform your employer that they may be contacted by your bank. Also include details of your previous job if you have been in your current position for less than three years.

If you are self-employed you will need to also provide income figures from your last two years tax returns, unless you choose a low doc loan.

You will need to provide your personal details including a tax file number and your driver’s licence. Also take the time to make sure that your details are correct and consistent across all of your identification documents, because if your name has been spelt one way on your driver’s licence and another way on your birth certificate, you may need to get a statutory declaration to explain the inconsistency.

You may need to provide your bank account details to show evidence of savings.

Put together a list of your assets and liabilities, plus proof of these values if required. Your assets can include your furniture and electronics, jewellery, your cars, insurance policies, savings and investments.

Consider how your credit cards and credit limits will look. You may think that you are doing a good thing by repaying down your credit card balances. However if you have a low credit card balance but a higher credit limit the bank will see that as more spending room and more opportunity to get into bad debt. Therefore consider reducing the number of credit cards you have and reducing the limits on those cards.

Always be honest and upfront with all information. If you think you have a black mark on your credit history which you neglect to mention in your application it can cause more problems by providing false information on your home loan application, than if you had been honest about any potential issues upfront. Most mortgage brokers will be able to find a way around a bad credit history or any perceived problem.