The very first thing you need to do to get a mortgage is to secure a minimum 5% deposit (10% – 15% is preferable). Once your deposit is in place, you may be wondering what else you need to get a mortgage. The process can seem daunting but we believe it should also be exciting. Having a whole of market mortgage broker by your side will allow you to approach your application with confidence and help you secure the right deal as smoothly and quickly as possible. In this guide, we explain how to apply for a mortgage, how lenders assess your affordability, and what you’ll need to prepare before applying for a deal.
How Do I Apply for a Mortgage?
The first thing to do is speak to a whole of market mortgage broker about your situation. Although it is possible to go direct to a lender, you may end up with a higher interest rate than you could have got elsewhere. Whole of market brokers can search thousands of deals from hundreds of lenders to see what rates are available to you. Also, without advice from a broker, you may apply for a deal that you’re not likely to get accepted for, which can damage your credit score and make it harder to get a mortgage with a different lender. Your advisor will also handle the application and liaise with all parties on your behalf to save you the stress of doing it yourself.
Once you’ve talked to your advisor, he or she will explain the next steps of your application, but read on to see some helpful tips on how to prepare.
How Do Mortgage Lenders Check My Affordability?
Lenders will assess your total household income, including your salary and any second income, benefits, commissions, or bonuses. They will then examine your expenses and debts such as loans and credit cards, to ensure you can afford monthly mortgage payments; and stress test for scenarios like interest rate hikes, retirement, maternity leave, or the addition of a child. They’ll also run a credit check with a credit reference agency during the formal application to assess your financial history and lending risk. It’s important to note that this is an overview of the process – every lender has their own criteria for assessing affordability, which is one of the reasons it’s so important to speak to an experienced mortgage advisor before applying for a deal.
How Do I Prepare for My Mortgage Application?
Check Your Credit Score
Your lender will perform credit checks during your mortgage application – typically starting with a soft search for an agreement in principle and a hard search for the full application. If you have any concerns about your credit score you should tell your broker about them straight away. Bad credit can make getting a mortgage more challenging, but usually, it doesn’t make it impossible. Your broker will assess your situation and use their expert knowledge of lenders’ criteria to see what options are available to you.
A good credit score can make help your application and you may be able to secure a better interest rate. We recommend inspecting your credit score as soon as possible to avoid any surprises and to correct any errors. You can do this online using a free credit reporting service such as Check My File. Having a copy of your credit report can be helpful when meeting with your mortgage broker, but it’s not essential as we should be able to access this information.
Ensure Your Proof of ID is Up-To-Date
To verify your identity, lenders require official photo ID, such as a passport or driving licence. It’s important to check the expiry date – if your proof of ID expires in less than 6 months you may have to renew it before lenders will accept it. Ensure all documents are accurate and that personal details match other documents, including your full name and current address.
Ensure Your Proof of Address is Up-To-Date
Your proof of address must match your ID, so if you’ve recently changed your name due to marriage, you’ll need to inform your bank and utility providers as soon as possible. Acceptable documents include bank statements, credit card bills, utility bills and mortgage statements – these will need to be original documents dated within the last 3 months (some lenders do accept digital copies). There are other documents you can use, such as your council tax bill, HMRC tax code letter or a tenancy agreement, and these will need to be from within the last 12 months.
Clarify & Evidence Your Deposit
You’ll need to have at least a 5% deposit to begin a mortgage application, but having 10% or more will increase the chances of your application being successful. You’ll then need to explain to your lender where your deposit is coming from and provide proof. This could include a bank or investment statement, proof of sale of assets, an inheritance certificate, or a signed gift letter (explaining whether the gift is repayable or not). Some lenders are more strict than others when assessing the source of a deposit, so inform your broker about your deposit as soon as possible.
Prove Your Current Income
Proof of income varies depending on whether you’re employed or self-employed. If you generate income from multiple sources you’ll need to evidence them appropriately.
If you’re employed, you’ll usually need 3 months of payslips and bank statements, or 6 months and a P60 if you need to evidence commission or overtime. If payslips are unavailable, a manager or HR letter may be considered by some lenders, but payslips are preferable.
If you’re self-employed, you’ll usually need 2 years of accounts, self assessments, and bank statements (both personal and business if applicable). Your most recent tax year overview may also be helpful.
Most lenders will consider benefits as income (excluding housing benefit), especially if they are long-term and stable, such as disability benefits, child benefits, and pensions.
Prove Your Current Expenses
Lenders evaluate your expenses to ensure you can afford mortgage payments on top of your other outgoings. Bank statements often provide most of the required information, but it’s helpful to also compile a list of your expenses. This will give your broker a better picture of your affordability and also help you evaluate and potentially reduce your outgoings – which can, in turn, increase your chances of securing the mortgage you’re after.
The Bottom Line
To get a mortgage, the first thing you’ll need to do is secure a minimum of a 5% deposit. The next step is to talk to a mortgage advisor. Your advisor will look at your affordability and use their expert knowledge of lenders’ criteria to work out how much you’ll be able to borrow and at what rate. Once your broker has found a deal you’re happy with, he or she will explain what documents you need to prepare – we’ve detailed these above if you want to get ahead! Then it’s application time, and again, your broker will handle this on your behalf and let you know if there’s anything more you need to do.
At Michael Usher Mortgage Services, we’ve been helping our local community for over 30 years! We search thousands of products to find a deal that suits your needs. We also guide you through the process and liaise with your lender, estate agent and solicitor to ensure your application goes smoothly, and we also help to protect your mortgage with our FREE Insurance Advice 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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Think carefully before securing any other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage.
