Documents Needed to Support a Home Loan Application

DDproperty Editorial Team
Documents Needed to Support a Home Loan Application
Borrowing money to buy a property is likely to be the single largest loan taken on in a lifetime. Banks profit from lending money by charging an interest rate on the loan amount, however without the option of a home loan, many people would not be able to accrue sufficient funds to become a property owner.
These loans are often known as a mortgage or a home loan, but either way it is labelled, it is essentially a debt. Therefore to ensure that an individual is financially sound to take on this debt, a bank or lender will carry out various checks to give them confidence that the applicant will repay the debt and lessen their risk of lending. Lending to an individual who cannot keep up with their repayments is less lucrative for the bank not to mention costly and timely to manage.
As part of a mortgage or home loan application, the following checks are likely to arise:

1. Proof of Identity

A lender will need verification on an individual to confirm that they are who they say they are to avoid fraudulent applications. Items requested could include any of the following: passport, birth certificate, identification card, marriage certificate in case of joint applications and even proof of current address that might include recent utility bills or a contract should the applicant be renting a property.

2. Proof of Income

A steady proof of income gives a lender reassurance that the individual has sufficient funds to repay the loan monthly. Lenders may request to see an employment contract, payslips and bank statements.
All these documents need to be for the last six months to paint a recent picture of their financial status, and the lender will look to see if the applicant can spend within their means. Lenders will also favour continuous employment.
A credit check is another tool to indicate the applicant's financial status

3. Credit Check

A credit check is another tool to indicate the applicant’s financial status. Several applications to borrow money raises a red flag making them riskier to lend. Credit checks will also be able to gather information on credit card applications and usage and advise if there have been any late payments, which is also a cause for concern.
A lender will want to see timely payments and that expenditure is well within the allocated credit limit. Any late payments or actions taken by another lender to retrieve unpaid credit, will deter a lender.

4. Down Payment/Deposit

Since many home loans and mortgages are taken out alongside a deposit, be prepared that a lender might need to see proof of the down payment or deposit. It could be that they also request proof of source of these funds in a bid to reduce money laundering.
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Disclaimer: The information is provided for general information only. DDproperty by PropertyGuru c/o AllProperty Media Co., Ltd. makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.

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