Home loan checklist: buying or refinancing

Buying

Work out your numbers

Your deposit: savings, any gift, and any grant you expect.
Your loan-to-value ratio. A 20% deposit usually avoids lenders mortgage insurance; below that it usually applies, unless a scheme or a family guarantee covers you.
Whether you qualify for the 5% Deposit Scheme (2% for single parents) or your state’s first home grant and stamp duty concession.
The upfront costs on top: stamp duty, conveyancing, building and pest inspection, and any lender fees.
Your borrowing power. Lenders test your repayment at your rate plus APRA’s 3 percentage point buffer, after your living costs and other debts.

Documents: employees

Your two most recent payslips, showing year-to-date earnings.
Your latest ATO notice of assessment.
Three months of statements for every bank account.
Details of every debt: credit cards (the limit counts, not the balance), personal and car loans, HECS-HELP.
Photo ID: driver licence or passport.
Evidence of your deposit, ideally savings built up over time.

Documents: self-employed

Two years of personal tax returns and notices of assessment.
Two years of business tax returns and financial statements.
Your most recent BAS.
Your ABN or ACN.
Three months of personal and business bank statements.
An accountant’s letter, for some lenders. Low doc lenders can work from BAS or bank statements instead.

Before you bid

Get pre-approval, and note its expiry date: most last about 90 days.
Book a building and pest inspection, and have a conveyancer review the contract.
Keep your finances still until settlement: no new credit cards or car loans.

Refinancing

Know your current loan

The balance owing, across all splits.
Your current rate, and whether it is fixed or variable. On a fixed rate, ask your lender for a break cost estimate.
Roughly what the property is worth. Under 80% LVR is where refinance pricing is usually sharpest; above it, mortgage insurance can apply again.
Your lender’s discharge fee.

Weigh the saving against the cost

Compare your rate with what lenders offer refinancers now. The refinance calculator shows the monthly saving and how many months it takes to cover the switching costs.
Add up the switching costs: discharge fee, government registration fees, any application or valuation fee, and break costs on a fixed rate.
Count any cashback, but read its conditions.
Keep the remaining term the same, unless you mean to change it: a longer term lowers the repayment and raises the total interest.
Ask your current lender for a better rate first. A broker can do this for you.

Documents

Your latest home loan statements.
A recent council rates notice.
Your income documents, as in the buying lists above.
Photo ID.

Questions to ask the broker

Which lenders on your panel fit my deposit or equity, income and property, and why those?
What is the comparison rate, and what fees apply over the life of the loan?
Do I need lenders mortgage insurance, and can anything waive it?
Can I have an offset account or redraw, and what do they cost?
How are you paid for this loan?

Where this comes from

Your Finance Guide is a finance education publisher. We are not a credit provider, broker, or lender, we do not hold an Australian Credit Licence, and we do not provide credit assistance. When you request a quote, your enquiry goes to a licensed broker who meets our criteria and compares rates from a panel of Australian lenders. Full details, including the licence we work in conjunction with, are in our Credit Guide.