Have The Right Documents To Finance Your First Home

When it comes to financing your first home, having the right documents in hand when you’re ready to apply will make the process faster and easier than you can imagine. Often it means your loan will be approved on the first run-through rather than rejected out of hand. Here are my tips on what documents to find and organize before you contact the lending agency.

Documents For Completing The Loan Application Form

Most lenders will want copies of the following documents when you apply for your loan.

  • W2 Forms (Wage and Salary Statement) for the past two years; your employer sends these annually to all employees.
  • Tax returns for the past two years
  • All bank account statements that show transactions made for the past three months
  • Recent pay slips to prove that you are employed and thus a good candidate for repaying the loan
  • Proof of identity such as a passport, a PAN card or other applicable documents

Having these with you when you walk in the lender’s door will show that you are organized and serious about securing the loan.

While the documents above are standard for all applicants, other specific forms are required for those who are salaried or self-employed.

home buying

What’s Needed If You Are Salaried

In addition to the basic documents, salaried applicants must present some additional and very specific documentation. This includes:

  • A current salary certificate as well as salary slips for the past three months that show all your deductions
  • Proof that you have worked at your current job continuously for the past two years; acceptable documents include a Form 16 or appointment and relieving letters
  • A bank book or statement which shows the previous six months of your salary deposits

If you work for a private limited company, you’ll need to show a company profile. Those who have worked less than one year in their current job must provide a copy of their appointment letter.

Required Documents For The Self-Employed

Lenders are naturally cautious about their money and want to be sure that self-employed applicants can actually pay back the loan. The following information will show them that you are in good financial shape.

  • A business profile on company letterhead
  • Documents confirming your IT returns for the past three years
  • Company income that’s certified by a chartered accountant
  • Profit and loss information for the last three years
  • The past year’s business and personal bank statements
  • Self-employed professionals must also provide a copy of their professional certificate.

I understand if you feel slightly overwhelmed at having to find all this information. However, you are going to need it if you want to apply, and having it before you apply is easier than trying to locate it when you’re in panic mode because the lender needed it yesterday. With just a bit of time and effort, this is one part of buying your first home that can be relatively stress-free, leaving you with more energy to handle the rest of the process.

Annabelle Stair is a lifestyle journalist based in Fremantle, WA. Her articles offer timely advice for Western Australia first home buyers, Perth homeowners and residents throughout the area.

Photo source: http://www.flickr.com/photos/68751915@N05/6848820425/

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