Documents lenders ask for

Plenty of loan applications stall for a dull reason: a missing, unsigned or out-of-date document. Knowing what lenders typically request, and why each item matters, lets you assemble the paperwork before you apply rather than in a scramble after the credit team asks. This lesson works through the usual categories, from identity to construction reports, and can serve as a loan documents checklist you adapt to your own situation.

Exact requirements differ between lenders, loan types and whether the loan is regulated consumer credit. Treat what follows as general information about what documents lenders need, and confirm the precise list with the lender or your broker.

Why lenders want so much paperwork

Documents serve three broad purposes. The first is legal: lenders have identity and record-keeping obligations under anti-money laundering law, and lenders of regulated consumer credit must make reasonable inquiries about a borrower's situation. The second is credit assessment: the lender needs to judge whether the loan can be repaid, whether the security covers the debt and whether the exit is believable. The third is documenting the security itself, so the mortgage can be registered over the right title held by the right owner.

Keeping those purposes in mind makes follow-up requests easier to understand, and easier to answer quickly.

Identity documents

Every borrower is usually asked to verify identity, and so are guarantors, company directors and, for trusts, the individuals behind the trustee. Lenders generally accept a photo document such as a passport or driver licence, sometimes with a secondary document, and many now offer electronic verification. Some ask for certified copies instead.

If your name differs across documents, perhaps after marriage or a legal change of name, include the linking certificate early. The anti-money laundering and identity checks lesson explains why lenders ask these questions and what they may do with the answers.

Entity documents

When a company, trust, partnership or self-managed super fund is borrowing or giving security, the lender needs to understand who controls it and whether it has power to borrow.

• Companies: a current company search, details of directors and shareholders, and sometimes the constitution.
• Trusts: the full trust deed with every variation, details of the trustee and appointor, and the trustee company's records if there is a corporate trustee.
• Self-managed super funds: the fund's deed, its investment strategy and the bare trust documents used for the purchase.
• Partnerships: the partnership agreement and details of each partner.

Many business-purpose loans also need a signed business purpose declaration confirming what the money is for. Read it carefully, because it affects which consumer protections apply. The borrower structures lesson explains how these entities change the paperwork.

Income evidence: full-doc and alt-doc

On a full-doc application, lenders rely on standard records: payslips and an employment letter for employees, and for self-employed borrowers, personal and business tax returns, notices of assessment and financial statements. The lender will say how recent each must be.

An alt-doc loan accepts other evidence where those records are not current or do not reflect present trading. Common substitutes include business activity statements, business bank statements and a letter or declaration from the borrower's accountant. Alt-doc is not the same as no-doc: the evidence must be genuine, and lenders may contact the accountant to confirm it. The low-doc and non-conforming loans page covers how these loans are assessed.

Where interest is capitalised and the loan will be repaid from a sale, a lender may place less weight on income and more on exit evidence. That shifts the paperwork rather than removing it.

Asset and liability statements

Most lenders ask for a statement of position listing what you own and what you owe. Assets include property, cash, shares, superannuation, vehicles and business interests. Liabilities include every mortgage, personal loan, car loan, credit card limit, tax debt, payment arrangement and any personal guarantee you have given for someone else's borrowing.

Supporting documents usually include recent statements for each loan and card, and for tax debts, a statement or payment plan from the tax office. Lenders commonly run a credit check, so an undisclosed debt tends to surface anyway, and it costs time and credibility when it does.

A worked description shows why this matters. Imagine a hypothetical business owner who lists a home loan and a car loan but forgets a credit card with a generous limit and a guarantor role on a relative's business facility. The credit check reveals both. Even if neither changes the lender's view of the loan, the assessor now has to ask questions, request statements and re-check the figures, and the file slips behind schedule. Listing everything at the start, with a short note explaining anything unusual, usually avoids that delay.

Property documents

For the security property, expect requests such as:

• the contract of sale and the vendor disclosure documents required in that state, if you are buying;
• a recent council rates notice and, for an existing loan, a current mortgage statement;
• leases, a tenancy schedule and outgoings for investment or commercial property;
• strata or owners corporation records where relevant;
• a building insurance certificate, often noting the lender's interest, before settlement.

The lender generally orders its own title search and instructs its own valuer, so you rarely supply those, though you may be asked to arrange access for the valuation.

Development and construction documents

Construction and development lenders need to see that the project is permitted, priced and buildable. Typical requests include the development approval and its conditions, architectural and engineering plans, a feasibility, the building contract, the construction program, and evidence of the builder's licence and required insurances. A quantity surveyor usually reviews the budget at the start and checks progress before each drawdown. Where pre-sales are a condition, signed sale contracts are needed too.

The feasibility tool and construction drawdown tool help you check that the numbers in these documents tell a consistent story.

Exit evidence

Short-term lenders also want proof that repayment is realistic: an agent's appraisal and campaign plan for a sale, or correspondence from an incoming lender for a refinance. The exit strategies lesson explains how lenders weigh that evidence.

Sending documents safely

Loan files contain exactly the information identity thieves want. A few habits reduce the risk:

• Never send a tax file number, password, banking login or one-time code through email, text or a messaging app. Redact the tax file number on documents where possible.
• Use the secure upload portal your lender or broker provides, and ask who will have access.
• If a lender asks to read bank data electronically, ask how the service works and confirm it never needs your password typed into an email or form you did not expect.
• Confirm any change in payment details by phoning a number you located yourself.

The scams and red flags guide covers common tricks, and the OAIC explains your privacy rights.

Common mistakes

• Sending a trust deed without its variations.
• Supplying statements that are too old by the time the file is assessed.
• Figures in the application that do not match tax returns or statements.
• Forgetting that guarantors and directors need their own documents.
• Leaving out a tax debt or a personal guarantee in the hope it will not matter.
• Sending documents piecemeal across several emails, so the assessor never sees a complete file.

What to ask the lender or broker

1. Which documents do you need, and how recent must each one be?
2. Do you accept electronic identity verification, or do you need certified copies?
3. Is this a full-doc or alt-doc assessment, and which income evidence counts?
4. How should I send documents securely, and who will see them?
5. How long will you keep my documents, and how are they disposed of?
6. Which documents will be needed again before drawdown or settlement?

The document checklist and the preparation checklist tool turn this list into something you can tick off as you go.