Which documents do I need to get home loan pre-approval?

Getting pre-approval is an important step in the early stages of the home loan process. Not only does it give you an idea of how much you can borrow, it signals to vendors that you’re serious when it comes time to make an offer.

While pre-approval is a preliminary step to actually applying for a loan — and isn’t set in stone once granted — it still requires plenty of paperwork. Below, we’ve compiled some of the main things your lender will ask for when you seek pre-approval.

Before they can do business with you, your lender will have to verify your identity. To do this, they will need a few forms of ID, which can usually be broken down into primary and secondary documents.

Examples of primary documents

• Australian driver’s licence
  

• Australian passport
  

• Australian birth certificate
  

• Foreign passport
  

Examples of secondary documents

• Medicare card
  

• Australian citizenship certificate
  

• ATO assessment notice (up to 12 months old)
  

• Phone, gas, or electricity bill (up to 12 months old)
  

Lenders will typically require some combination of the two. For example, ANZ asks applicants to provide at least one primary document or two secondary documents, while NAB requests two primary documents (one photographic and one non-photographic) and one secondary document.

Your income and employment status will feature quite prominently in your lender’s assessment of you. Simply put, the more you earn, the more confidence your lender will have in your ability to pay off a loan.

Some income documents your lender might ask for include:

• Recent payslips
  

• Most recent tax return
  

• Bank statement showing salary payments
  

• Your employment contract or a letter confirming your employment
  

• Super fund statement (if you’re receiving superannuation)
  

• Shareholding certificates or dividend statement notice (if you receive investment income).
  

Things get a bit more complicated if you’re a casual worker or self-employed, as there’s less certainty around your hours and how much you earn. Thankfully, there are still ways to assure your lender that you’re financially stable.

For example, casual workers might be asked to provide proof that they’ve been with the same employer for at least six months, along with payslips which show their latest year to date earnings summary. 

And borrowers who are self-employed can still get in lenders’ good books so long as they can provide their business’ notice of tax assessment, profit and loss statement, and balance sheet, along with proof that their ABN has been registered for the requisite amount of time.

Lenders will like to see evidence of genuine savings, that is, money that you’ve saved up over time rather than acquired overnight. If your deposit is entirely made up of money you inherited or received as a gift, your suitability as a borrower may be called into question. 

Having saved up a substantial amount over several years signals to lenders that you’re both responsible with your finances and can regularly set aside enough money to be able to service a mortgage.

You'll also need to provide a breakdown of your living expenses so your lender has an idea of where your money is going each month — and whether there’s room in your budget to make regular mortgage repayments.

Some things your lender will be looking at include how much you spend on:

• Groceries
  

• Private vehicle costs (such as petrol and car insurance)
  

• Public transport costs
  

• Utility bills
  

• Recreational costs (such as entertainment and dining)

Finally, your lender will want to know about any other debts you might have and how they might affect your ability to pay off a mortgage. These might include:

• Credit cards

• Car loans

• Personal loans
  

• Student loans
  

• Other home loans
  

Whether or not you’ve been a responsible borrower in the past will be a major factor in how much a bank will ultimately be prepared to lend you. So try to pay off as many lingering debts as you can and consider cancelling any credit cards you no longer use.