One of the standard pieces of advice for mortgage applicants is to have all their paperwork in order before they approach a lender. This saves time, as the lender won’t have to keep coming back to you with further requests for information. It can even boost your chances of being accepted, as your application will be reviewed fewer times.
If you contact an experienced mortgage broker to help with your application, then they will tell you exactly what the lender needs to see. However, it’s worth being prepared well in advance to avoid any last minute surprises. Here’s look at the most commonly requested documents.
Your last three month’s bank statements—most people are aware that a lender will have access to their credit score, but some people are taken aback when they realise that they need to send in bank statements backdated for three months, or even six months. This is to help them verify your income and outgoings, and also to check for any risk factors.
For example, if your spending frequently exceeds your income, and you are often overdrawn by the end of the month, this may make lenders more wary of your application. Take care not to exceed your overdraft limit in the months before your application, and try to only use it as a last resort.
If you regularly use Buy Now, Pay Later options such as Klarna, be aware that this can negatively impact on mortgage affordability checks with some lenders. Payday loans with high interest rates are a definite red flag for many lenders, even if you have paid them off in full.
The lender will also look for any evidence of a regular gambling habit, and spending habits which are seen has extravagant, such as frequent holidays abroad, or regular purchases of luxury goods which are not supported by your income. It’s sensible to review your spending habits in the months leading up to your application, and make cutbacks where possible.
If you are employed, the lender will want to see your last three month’s payslips and your latest P60 tax form. For self-employed people, the lender is likely to request your last three year’s accounts and tax returns. There are a few lenders who will accept two or even one years’ worth of accounts, so it’s worth seeking advice if this applies to your situation.
The lender will also ask to see proof of your deposit funds, in the form of savings account statements. If the deposit has been given to you as a gift, from your parents for example, then the lender will also want to see a gifted deposit letter to prove that it is a gift and not a loan.
Finally, you will be asked for some proof of ID, such as a passport, and proof of your current address, such as a recent utility bill. Make sure that you get all the details right on the application, such as your full name, an accurate three-year address history, and honest answers about your income and any debts and loans.
If you are looking for bad credit mortgage brokers UK, please get in touch today.
Your home may be repossessed if you do not keep up with your mortgage repayments.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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Create Finance Limited is an appointed representative of Mortgage Advice Bureau (Derby) Limited which is authorised and regulated by the Financial Conduct Authority.
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.
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