Whether you’re a First Time Buyer, a seasoned home mover, or you’re looking to remortgage, starting out on a new mortgage journey can be an exciting but daunting time. Thankfully, there are things you can do to prepare yourself for the process and help things to run smoothly. However, you don’t need to do any of these things before speaking to a mortgage broker. In fact, choosing your broker and booking in an initial chat is a great way to get things moving. You can book a free chat with one of our friendly, award-winning advisors here.
Aside from booking in your free chat, we recommend reading through the following guide, which will help you prepare for your mortgage interview and application – including all the documents and information you’ll need to provide. You can also continue your preparation by reading our other two guides on this topic: ‘What Questions Should I Ask My Mortgage Broker?’ and ‘What Questions Will I Be Asked in a Mortgage Interview?’
Providing Acceptable ID
You’ll need to provide official photo ID for all applicants so the lender can verify your identity and comply with anti-money laundering regulations. Typically, this will either be your passport or driving licence. You will either need to provide the original ID document or use an electronic verification service to upload it.
Make sure you check the expiration date of your ID – if it expires in less than 6 months, you may need to renew it before applying for your mortgage. Also, check that your personal details are accurate and up-to-date, such as your name if you’ve recently got married and your address if you’ve recently moved. This goes for all the documents you provide, as your personal details will need to be consistent.
Providing Acceptable Proof of Address
Continuing with the initial identification process, you and any other applicants will need to provide proof of your current address(es). The most common documents used for this are bank statements, credit card bills, utility bills and mortgage statements (if you already have a mortgage). These will need to be dated within the last 3 months, and you’ll either need to provide the original copies or a digital copy, depending on the lender.
Other documents that can be used to prove your address are council tax bills, HMRC tax code letters, or a tenancy agreement (if you’re currently renting). These documents will need to be dated within the last 12 months. As with the ID documents, it’s important that you ensure all personal details are accurate, up-to-date, and consistent across the documents you provide.
Proving Your Income
You’ll need to provide evidence of any income that you want to include in your application. Exactly what documents you’ll need to provide can depend on the lender, whether you are employed or self-employed, and whether you receive commissions, overtime payments, or benefits.
For employed applicants, the most recent 3 months of payslips and bank statements will usually suffice, but some lenders may wish to go further back. If you are also trying to evidence commissions or overtime payments, you may need to provide the most recent 6 months of payslips and bank statements, as well as your most recent P60. If you are trying to evidence bonuses, you may need to go back 2 or 3 years to show the lender that these are consistent and reliable additions to your income.
For self-employed applicants, you’ll typically need to provide 2 to 3 years of certified accounts and HMRC tax returns (SA302 and possibly tax year overview), and 3 to 6 months of bank statements (both personal and business accounts). To learn how to find and print these documents, please read our guide, ‘How to Get Tax Calculation (SA302) & Tax Year Overview – Step-By-Step Guide with Pictures’.
Lenders will typically accept benefits as additional income as long as they are long-term and stable (excluding housing benefit). Benefits that are often considered include disability benefits, child benefits, and pensions. Your lender or broker will let you know what documentation they require to evidence your specific benefits.
Showing Your Outgoings
Lenders will want to have a detailed understanding of your outgoings so they can work out whether you’ll be able to afford the mortgage repayments. They also often stress test your affordability against higher interest rates to check that you would still be able to afford your mortgage even if rates were to rise. Typically, you’ll need to provide 3 to 6 months of bank statements so your lender can get a detailed picture of your spending habits and commitments. They will scrutinise all of your outgoings, including bills, debt repayments, childcare costs, insurance policies, pension contributions, food costs, travel costs, subscriptions, and leisure spending.
It can be helpful for you to make your own list of outgoings, as you may be asked for this information during a mortgage interview. Doing this early can also help you understand your own spending habits better and make improvements if necessary. For example, you may be able to reduce or eliminate unnecessary outgoings, or stop spending habits that may be detrimental to your application, such as gambling.
Showing Your Debts
Understanding how much debt you are currently liable for is a crucial part of your lender’s affordability and risk calculations. This could include personal loans, student loans, car finance, credit cards, overdrafts, and other mortgages. It’s important to be upfront and honest about your debts from the start, as your lender will verify the information you give them.
Aside from checking your individual debts to work out remaining balances, we also suggest you have a good look at your credit report to ensure you don’t miss anything. The best way to do this is by signing up to CheckMyFile. We always recommend CheckMyFile because this platform pulls data from all three of the major credit reference agencies in the UK, so you can get a detailed understanding of your credit history. We’ll discuss this further in the ‘Checking and Improving Your Credit Score’ section later.
Discussing Children or Dependents
A dependent is anyone who is financially reliant on you and is not included in your mortgage application. Most commonly, this will be your children, but it may also be a spouse, partner, parents or other relatives. Understanding how many dependents you have and how much of a financial commitment they are is another aspect of your lender’s affordability assessment.
Lenders need to be sure that you can comfortably afford your monthly mortgage repayments, and having dependents means you have additional, regular outgoings that reduce your disposable income. It’s important to be upfront about your dependents as your lender will scrutinise your outgoings to verify all the information you provide.
Checking and Improving Your Credit Score
Lenders will scrutinise your credit history for two main reasons – to see how much debt you are currently servicing and to understand how responsible you are when it comes to paying off your debts. If you’ve had credit issues in the past, such as late payments or CCJs, it’s important to tell your mortgage broker. A good broker will have access to a wide range of lenders and have extensive knowledge of their criteria, meaning they’ll be able to see what options are available to you.
We also recommend you keep track of your credit report in the months leading up to your mortgage application so you can make improvements. This may be a case of correcting any mistakes or consolidating and paying off certain debts. As mentioned earlier, in our experience, the best service to use is CheckMyFile because it enables you to see your credit report from all three of the major credit reference agencies (Equifax, Experian, and TransUnion) in one place. This will give you the most accurate and detailed picture of your credit history. You can learn more about CheckMyFile by reading our guide, ‘What is CheckMyFile and is it the Best Way to Check My Credit Score?’
Evidencing Your Deposit
Aside from a couple of mortgage deals that don’t require a deposit and some Help to Buy Schemes that require only a 5% deposit, you’ll typically need to save at least a 10% deposit to apply for a mortgage. Generally, the larger your deposit, the more deals you’ll have available to you and the lower the interest rates.
Your deposit can come from various sources, but you’ll need to provide proof to your lender so they can verify it. This can include bank statements, investment statements, proof of sale of assets, an inheritance certificate, or a gift letter (signed by the gifter and explaining whether the gift is repayable or not). Some lenders are more strict than others in this regard, so it’s important to inform your broker about your deposit early so they can advise you as to what you’ll need to provide.
Discussing the Property
The lender will need to have some information about the property you are planning on buying. If you are still looking for a property, you’ll need to apply for a Mortgage in Principle (MIP) instead of a formal mortgage offer. An MIP is a non-binding indication from a lender of how much they are willing to lend to you. You can learn more about MIPs by reading our guide, ‘What’s the Difference Between a Mortgage in Principle and a Mortgage Offer?’
Once you have found a property, you can then apply for a formal mortgage offer. It’s at this point that the lender will want to know about the property to ensure it acts as adequate security for the loan. Typically, the information they require includes the full address, purchase price, property type (house, flat, bungalow, etc), whether it’s a new build or existing property, the construction type, and whether it’s freehold or leasehold. The mortgage lender will usually carry out their own valuation of the property once they have these details from you.
Preparing For Mortgage Interview Questions
The last step we recommend to ensure that you’re fully prepared for your mortgage application is to get a feel for the questions involved in the process. This includes questions you should ask your mortgage broker and questions your broker (or your lender) might ask you. Reading the following two guides will help you to feel more confident going into your mortgage journey and could help you make the right decisions along the way:
What Questions Should I Ask My Mortgage Broker?
What Questions Will I Be Asked in a Mortgage Interview?
The Bottom Line
Now you’ve read through the guide above, please book in a free chat with one of our expert advisors so you can get the ball rolling on your mortgage journey. Finding and applying for a mortgage can be a complicated process, but having an experienced mortgage broker by your side will make things much easier. We’ll ensure you find the right deal and help the process go quickly and smoothly. In the meantime, feel free to start organising some of the documents and information detailed in this guide, and don’t forget to read the other two guides regarding questions to ask us and questions we may ask you. We hope these guides help you to feel more confident about the journey ahead, but rest assured, we’ll be here to guide you every step of the way.
At Michael Usher Mortgage Services, we’ve been helping people throughout Surrey, Hampshire and Berkshire for over 30 years! We’re not affiliated with any particular lender, so we can access a comprehensive range of mortgages from across the market to find a deal that suits your needs. We’ll guide you through the process and liaise with your lender, estate agent and solicitor to ensure your application goes as smoothly as possible, and we can also help protect your mortgage with our FREE Insurance Service.
Talk to one of our friendly mortgage advisors for free to get going quickly. Our head office is on Frimley High Street, but we can also help you remotely via phone or video call if you’d prefer. We look forward to chatting with you!
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Your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice. The precise amount will depend on your circumstances but will be agreed with you before proceeding.
