Applying for a mortgage - be prepared!

Be on the ball when applying for a mortgage with this great set of guidelines from experienced mortgage expert, Sue Ellis

"I am just about to start looking for a property to buy. What am I likely to be asked to provide when applying for a mortgage?"

This is a very good question and you are very wise to be thinking already about what you may need to provide to a mortgage adviser/lender in due course! Like many things in life, preparation is key. When I initially speak to clients, to make a recommendation on products that are really right for both for their needs and circumstances, I ask for the following information:

Firstly, full name, address and date of birth, and an accurate three-year address history. Some clients have moved multiple times and it’s important to be able to provide all addresses and your status whilst living there - ie: tenant/living with family/owner, etc. - as I find quite often that clients can’t remember where they’ve lived. So think about that one and do also ensure that you’re registered on the electoral roll at your current address - lenders like to see you have a clear link with those addresses where you have lived.

Next, your credit history. You will need details of any other credit – eg: mortgages/loans/credit cards/HP agreements/maintenance payments etc - including up-to-date information on how much is owed, how long for, to whom, the monthly payment amount and whether this will be repaid following the borrowing application.

When the initial check is carried out (usually referred to as a ‘Decision in Principle’) the lender will use a Credit Reference Agency to check your address history and the level, types and conduct of all credit held against you. By doing this a ‘footprint’ will be left to show that credit in the form of a mortgage has been applied for - much in the same way as applying for any other form of credit. If you are unsure about your credit history then I recommend going online to obtain a copy of your credit report using either Noddle or Callcredit - it's free and the results only take minutes to obtain. It will not only ensure that accurate and correct information is given to the lender but lack of disclosure can also result in a decline or an unexpectedly low borrowing capacity.

Income, of course, is obviously a major part of the assessment. I ask for a minimum of the latest 3 months' worth of payslips - if you’re paid weekly, bring enough wage slips to cover this period - and your latest P60. It’s amazing how many people don’t keep their payslips. Always keep them safe or at the very least know who to ask at your workplace if you need a copy. If you’re self-employed, I will need accounts for a minimum of a year (but up to three years if trading for longer) or Tax Computations and corresponding Tax Year Overview, obtained from your accountant or HMRC. 

Bank statements are another ‘must have’. Three months’ worth is usually sufficient for the lender to see what is paid out each month - eg: food/utility bills/vehicle running costs etc - to paint a reasonable picture of your income and outgoings. Statements also show any other forms of income - eg: tax credits/pensions/maintenance payments, etc - useful, as they can sometimes be used to assess potential borrowing.

Proof of deposit is required. Whether in the form of savings/a gift from a relative or borrowing on another asset, in order to satisfy money laundering guidelines all advisers/solicitors have to ensure that the deposit being provided is from legal means.

Lastly, I will need address ID and name ID. The first can be supplied as a recent utility bill (within the last three months), bank/credit card statements or your latest council tax bill. For name ID the most usual are passports or driving licences. A word of warning here - make sure your driving licence shows the correct current address. It’s amazing how many people don’t update and it comes with a potential fine of £1000. I’ve also had expired passports and driving licences with incorrect names and even the wrong date of birth in some cases, so please check!

Advance preparation will not only ensure you aren’t shopping with champagne tastes and beer pockets, it will then prevent that last-minute scrabble around for documents that could lose the house of your dreams!  

Sue Ellis works alongside Johnny Magee as a Mortgage Broker at JEM Financial Planning. The team has over 50 years’ experience in investment, retirement and inheritance planning, mortgages, protection and general insurance. To speak to Sue or Johnny, telephone 01386 840777 or visit www.jemfinancial.com.