What documents do I need to give a broker for pre-approval?

One of the easiest ways to make pre-approval slow and stressful is to gather your paperwork as you go. One of the easiest ways to make it fast and clean is to have it ready before you start. A broker will tell you exactly what your chosen lender needs, but the documents below are what almost every lender wants to see, so preparing them early puts you well ahead.

Proof of who you are

Lenders are required to verify your identity, usually to a points based standard. In practice that means a combination of identity documents, such as a passport, driver licence, Medicare card and similar. Having clear copies of your main identity documents ready saves a lot of back and forth at the start.

Proof of your income

How you prove income depends on how you earn it, and this is where the documents differ most between borrowers.

If you are an employee

• Recent payslips covering your current pay.
• Sometimes a letter from your employer confirming your role and that you are permanent or ongoing.
• Occasionally your most recent tax documents, depending on the lender.

If you are self employed

• Your most recent personal and business tax returns.
• Business financial statements such as profit and loss and balance sheet.
• Sometimes your business activity statements.

If any part of your income is variable, such as overtime, bonuses or commission, the lender may want to see a track record of it before counting it, and different lenders count it to different degrees. A broker can tell you in advance how a particular lender treats your kind of income, which is often the difference between a smooth approval and a frustrating one.

Your bank statements

Lenders ask for statements because they tell a fuller story than figures on a form. From your statements a lender can see your salary arriving, your everyday spending, your savings pattern and your existing commitments. Statements that show steady saving and sensible spending make for a stronger application, so it is worth understanding that they will be read closely.

It is also why the months before you apply matter. Avoiding new debts, gambling transactions and erratic spending in the lead up gives your statements the best possible look when a lender finally reads them.

Details of your debts and commitments

You will need to declare your existing liabilities, because they affect how much you can borrow. A point that surprises many people is that lenders generally assess a credit card on its limit, not its balance, so a card you never use can still reduce your borrowing capacity simply because the limit is there.

• Credit cards, including the credit limit on each, not just what you owe.
• Personal loans and car loans, with the lender and repayment details.
• Study or education debt such as a HELP or HECS balance.
• Buy now pay later accounts and any other regular commitments.

Evidence of your deposit and savings

Lenders want to see your deposit and where it came from. Many also look for what is called genuine savings, money you have built up over time, as a sign of financial discipline. If part of your deposit is a gift or comes from another source, it is far better to flag that early so the lender can tell you how it treats it, rather than have it raise questions later. A gift often needs to be confirmed in writing by the person giving it.

A picture of your living expenses

Finally, the lender will assess your living expenses, partly from what you declare and partly against a benchmark it uses for households like yours. Being realistic and accurate here matters, because understating expenses tends to come out in your statements anyway and can slow things down or undermine trust in your application.

Documents that commonly trip people up

A few items catch buyers off guard more than others, so they are worth preparing early.

• Proof of any non salary income, which often needs more history than people expect.
• Evidence of the source of a deposit gift, confirmed by the giver.
• Full details of every liability, including cards and buy now pay later accounts that are easy to forget.
• Up to date statements, since lenders want recent ones, not last year copies.

Putting it together

None of these documents are difficult to find, but chasing them one at a time while a lender waits is what makes pre-approval drag. Having them organised before you apply is the single biggest thing you can do to make the process quick.

If you are applying with someone else

When you apply jointly, for example with a partner, the lender generally needs the same set of documents from each of you. That means each applicant provides identity, income evidence, statements and details of their own debts. It is worth both people getting organised at the same time, since the application can only move as fast as the slower set of paperwork.

When standard income documents do not fit

Not everyone has a tidy couple of years of payslips or tax returns. New business owners, contractors, people returning to work, and those with income from several sources can all find the standard checklist does not quite match their situation. There are usually still options, and different lenders take different views, which is exactly the kind of situation where getting advice before you apply saves time and avoids an unnecessary knock back. The key is to be upfront about your circumstances early, so the application goes to a lender that can work with them.