In our previous articles, we explored why lenders ask for more information than ever before and how technologies such as Consumer Data Right (CDR) are helping reduce paperwork.
Despite these improvements, one question still comes up regularly:
“Why do you need all these documents? Haven’t I already given you everything?”
It’s a fair question.
The short answer is that we’re not collecting documents for the sake of it. Every document we request has a purpose.
Our role is to present your application in a way that gives the lender the information they need to make a prompt and informed decision.
1. Every lender has different requirements
One of the biggest misconceptions is that all lenders assess applications in exactly the same way.
They don’t.
One lender may accept a single payslip, while another requires two.
One lender may ask for three months of bank statements, another may require six.
Some lenders are comfortable with one year’s financial statements for a business owner. Others require two years, along with tax returns, BAS statements or additional supporting information.
Part of our role as finance brokers is understanding these differences before your application is submitted.
Rather than sending the same information to every lender, we tailor your application to suit the lender we’re recommending.
2. Finance decisions rely on current information
Financial information can change quickly.
Your bank balance today is probably very different from three months ago.
You may have changed jobs, purchased a vehicle, refinanced another loan or experienced changes in your business.
Lenders are making decisions based on your current financial position, so they often require recent documentation to support the application.
While it can feel repetitive, providing up-to-date information helps avoid delays in the approval process.
3. We have our own professional obligations
Many people assume a finance broker simply forwards documents to a lender.
In reality, our responsibilities extend well beyond that.
Depending on the type of finance, we have obligations relating to responsible lending, verifying information, identifying clients, anti-money laundering requirements, maintaining appropriate records and acting in our clients’ best interests where those obligations apply.
That means we can’t simply assume information is complete or accurate.
We need to understand your circumstances so we can recommend appropriate lending options and present your application professionally.
4. Different types of finance require different information
The documents required for a home loan are very different from those needed for business finance.
A PAYG borrower purchasing a home may only need ID, payslips and bank statements.
A business owner applying for working capital or purchasing commercial property may also need financial statements, tax returns, BAS statements, trust deeds, company information and details of existing facilities.
The complexity of the documentation generally reflects the complexity of the finance being requested.
5. Good preparation saves time
One of the most valuable things a finance broker can do is identify what information is likely to be required before the application is submitted.
Spending a little more time preparing a complete application upfront often reduces requests for additional information later.
It also allows us to identify potential issues before they become problems, giving us the opportunity to discuss solutions with you before the application reaches the lender.
Our goal is simple: ask for the right information once, rather than coming back repeatedly for additional documents.
Technology is helping
Technology is also making the process easier.
As we discussed in our article on Consumer Data Right (CDR), borrowers can now choose to securely share some financial information electronically through accredited platforms such as Frollo.
This can reduce the need to download and email multiple bank statements while improving security and accuracy.
As more lenders adopt these technologies, we expect the amount of paperwork required for many applications to continue reducing.
The bottom line
Every document your finance broker requests should have a purpose.
Sometimes it’s to satisfy a lender’s credit policy. Sometimes it’s to meet our own professional obligations. Often, it’s to ensure we present your application in the strongest possible way from the outset.
Our aim isn’t to create more work.
It’s to understand your circumstances, recommend the right lender and help you obtain the finance you need with as little friction as possible.
