Finding a home to buy is exciting.
Applying for a mortgage? Somewhat less so.
Nonetheless, it's really important to get your paperwork in order, so that your application can be processed smoothly.
The last thing anyone wants is unnecessary requests from lenders for further information.
This is particularly true at the moment during COVID19.
Lenders service is slower as they deal with higher demand for mortgages, and staff working from home.
The last thing you want is for your application to be in a queue for a week or two, only for the lender to ask for more information. You supply the information, which then goes back in the queue for another fortnight.
The aim of the game... GET IT RIGHT FIRST TIME!
The documents you will need are:
- passport or driving license (to prove your identity)
- utility bill or council tax bill (to prove residency)
- bank statements for your current account for the last three to six months (and if you're self-employed, last three to six months business bank statements as well)
- tax calculation (SA302) and tax year overview from HMRC for the last two years if you are self-employed, or have earnings from more than one source
- last three month’s payslips & latest P60 (employees)
- proof of deposit, in the form of bank statements showing funds being built up (if the deposit is coming from a gift, lenders normally require a letter from the donor)
That's it. Easy isn't it?
Oh yes, a couple more things.
Lenders will ask how you've coped during COVID19.
Have you taken a mortgage payment holiday? Have you been furloughed? Are you now back working full-time?
If you're self-employed, how is the business performing? Has it accepted any government help e.g. a bounce-back loan?
What else can I do?
Check your monthly income & outgoings.
Put your income in one column, and your outgoings in another.
Outgoings could include items like food, loan & credit card payments, council tax, utilities, car tax & fuel, holidays, insurances etc.
Be honest with yourself. It’s really important that both you and the lender understand how much will be left over after the mortgage payment is made.
Check your credit report. Make sure there’s nothing nasty lurking within it.
There are three main credit reference agencies used by lenders: Equifax, Experian, and Transunion.
Lenders may use one or two of these, or all three. So it’s best to check all of them. There’s a system called “Check My File” that checks all three, which is useful.
Also, you’ll need a solicitor. Shop around for quotes.
Why do mortgage applications get turned down?
There are various reasons.
Let’s start with poor credit history.
If you haven’t checked your credit report, and something nasty is lurking there, your application could be rejected.
Or you could end up with a lender that will accept clients with credit issues, but the interest rate will be higher.
Either way, you get a result you weren’t expecting. So check.
Or you could have too much debt. If you’re paying out a lot on credit cards and loans each month, there may not be enough income left over to pay a mortgage.
Again, check you credit report, and check your monthly income and outgoings before you apply.
Generally speaking, lenders don’t like them. If you can’t make your income stretch a whole month, and need to take a loan to make ends meet, a lender is less likely to approve your application.
These items stay on your credit file for six years, so it could count against you, even if you’ve paid them on time.
Not all lenders automatically decline if there is a payday loan, but it’s a question of knowing where to look.
Still with us?
Don't be put off. This list provides you with a good basis from which to start. Lenders reserve the right to ask for whatever they want, but you can't go far wrong if you follow these steps.
We know we’re biased, but speak to us!
We’re used to dealing with all of these matters, and whatever your requirement, we will try to help you.
Contact Mortgage Search Go now and we’ll have a chat about it and help you get your paperwork and finances in order.