OCBA - Applying for a loan

Applying for a loan

When you apply for a loan, the lender may ask a number of questions to fully assess your borrowing capacity. You should also have a list of questions prepared for the lender.
In addition, you should ensure you have the following paperwork:

payslips or a letter from your employer outlining length of employment and salary
details of any second income, bonuses, allowances or benefits
details of credit cards, store cards and other loans
proof of share holdings and other assets
photocopies of current bank account statements
if self-employed, tax agent income statements and income tax returns
if self-employed, profit and loss statements certified by a registered accountant
if also selling a home, copies of contracts or a letter from a solicitor or conveyancer confirming a
firm buyer
if paying out an existing mortgage and starting a new home loan, a letter from the present lender stating amount owing and proof of past repayments, and
a photocopy of the front page of the contract of sale, if you have already decided on a property.

The loan agreement
Do not sign the loan agreement without carefully reading and understanding its contents.

Each credit contract and pre-contractual statement must include:

the amount of credit to be provided
the annual percentage rate/s
how the interest will be calculated and when it will be charged
the total amount of interest if the contract is paid out within seven years
the credit fees and charges
how changes in the contract will be advised
any default rate of interest and how it will be calculated
the frequency of account statements
relevant commission charges
if mortgage guarantee insurance applies, and
details of credit-related insurance financed under the contract.

After the contract is signed, the lender is required to provide you with a copy of the signed contract. Regular account statements should be provided and include:

all fees and charges
the amount of credit provided during the statement period
interest charges, including when they were charged
the annual percentage rate, including any changes during the statement period
the opening and closing balances
the date the statement period begins and ends
payment transfers to and from other accounts
minimum payments owed and the due date
insurance payments made, the name of the insurer and any commission paid, and
any corrections to previous accounts.

If you are unsure about anything in the contract, ask for clarification from the lender or seek independent advice from a solicitor, accountant or conveyancer.

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