Getting ORGANISED for a Mortgage Application…
Mortgage Advice by Manchestermoneyman
– EXPERIENCED Mortgage Broker in Manchester & Surrounding Areas –
Getting a MORTGAGE is very much about getting ORGANISED
All Lenders will want you to produce lots of different documents about yourself to back up the information you are putting forward and the more of this you can have available at the outset the quicker we can obtain a mortgage offer on your behalf. Think about your mortgage application as a bit like a job interview – you need to present yourself in the best possible light and be prepared for the information you provide to be checked out thoroughly.
Getting Organised for a Mortgage
These are the documents you will be asked to produce and here are the 10 secrets behind why the Banks ask for them:
1) Your last 3 months’ payslips –
This is to back up your earnings and your net pay should match exactly what goes into your bank account each month. If you have any deductions on your payslip such as car parking or subscriptions that you don’t need then cancel them immediately. If you want overtime to be taken into account then make sure you put the hours in at work in the months running up to your application and ensure it appears on each payslip. Ensure your payslip doesn’t show you living at a previous address or this will ring alarm bells.
2) P60 –
Some Lenders require this simply to back up your payslips but if we can evidence that you consistently receive overtime and bonuses each year then these can be taken into account. If you are able to produce 2 consecutive years’ P60’s that back up that you consistently earn a bonus, overtime or commission then we can look at taking 100% of this into account to boost your borrowing capability.
3) Last 3 years’ SA302’s (self-employed only) –
You (or your Accountant) can download these directly from HMRC website for instant access, please email me for instructions. This will be your proof of income. There can be some really wild discrepancies Lender to Lender as regards borrowing capacity for a Director of a Limited Company. Averaging dividends + salary over the last 2 years is the norm but there are Lenders who will go from the latest year if there has been an increase and it can be justified as sustainable. Some Directors do not withdraw their full dividend if they have a Directors’ Loan or if they simply prefer to leave their cash in their business and therefore they can borrow less than they might reasonably expect. However, we do have access to Lenders who can go off the net profit of the company instead.
4) Last 3 months’ current account Bank Statements –
Since the Mortgage Market Review of 2014, the analysis of your expenditure has become one of the most important things in terms of a mortgage application. Lenders will not want to see gambling transactions, bounced direct debits or you going over an agreed overdraft limit. Part of what we do prior to submitting your application to the Lender is to go through your bank statements transaction by transaction checking for things that might cause a problem, this is a key part of the process and you will really benefit from us carrying out this exercise on your behalf. Your salary should be paid through your bank account and you should ensure that your accounts are in good order. Cancel any unnecessary direct debits in the run-up to your application. Online bank statements are usually ok if they can be downloaded securely and if they clearly display your name and account details with no redactions. Use your credit card for one-off spending and clear your balance in full each month wherever possible.
5) Proof of Deposit –
For anti-money laundering purposes you will have to evidence build-up of your savings. If you are being gifted some money towards your deposit then we will need to ask your family member to sign a letter to confirm they are not expecting repayment of the funds. We can advise you who this letter needs to be addressed to and ensure it’s written in the correct format. Try not to move money around your Accounts too much as it can create a long audit trail. Almost all Lenders will refuse to accept a loan as a source of deposit. If you are remortgaging another property to raise the deposit don’t be surprised if the Lenders ask you to complete the remortgage and the purchase on the same day.
6) Proof of ID (passport/driving licence) –
We will need to see some original ID to prove you are who you say you are You just need to ensure it’s all accurate on the date. It’s important that your ID shows your middle names and matches how it appears on the electoral register. You will be asked to produce ID to your Solicitor also.
7) Proof of Address –
This needs to be dated within the last 3 months and a recent bank statement or utility bill usually does the trick. If it’s a utility bill check it doesn’t show you as being in arrears. This is more anti-money laundering checking and a back up that you live where you say you live.
8) List of your regular monthly outgoings. If you are buying a new property this should be based on what your outgoings will be after you move –
The key thing here is to be realistic when it comes to your outgoings as it will be “sense-checked” by the Mortgage Lender. As well as being a necessary part of your mortgage application this will act as a handy budgeting tool for you to calculate the maximum monthly mortgage payment you can afford. Remember to factor in future potential interest rate rises and think about whether you can afford your mortgage payments in the future.
9) Up to date copy of your Credit Report –
This is not a document that the Lenders will ask you to produce as part of your application but it is extremely useful for us to have because if there is any adverse information registered against you we’d rather know now than later so we can help you rectify. You can also check that your details are entered correctly on the Electoral roll on your credit report. If a client contacts me who have been declined elsewhere the answer to why (Banks often don’t tell you why your application was unsuccessful) it happened can usually be found within the credit report. We look at these reports every day and know exactly what to look for, email us your report and we’ll take a look for you. Once you see your credit report for the first time you will likely be surprised how much data is stored about you and Lenders these days place a lot of emphasis on this. If you have a low score don’t panic, we can often help as long as you have a good deposit to put down.
10) Copy of your latest Mortgage Statement if you currently have a mortgage –
If you are selling your house or remortgaging it’s useful to obtain a settlement figure from your current provider so we can be certain how much equity you have available. This also proves you have kept all your mortgage payments up to date.