If you are planning on applying for a mortgage, then it is important to prepare for this as much as you can in advance of submitting an application. You should also start collecting the supporting documentation that will be needed as part of the lender’s assessment process, and in addition, speak to a mortgage advisor for advice and to help you with your budget.
A qualified mortgage advisor, such as us here at Mortgage Light, will be able to help you at the early stages of your planning. We can help you work out your budget, tell you how much you can afford, and guide you through the process of buying a home or remortgaging. As mortgage advisors, we obtain an overview of your situation and advise you on the range of mortgage products available, outlining which ones might be best suited to your individual circumstances. We would then recommend an appropriate lender, obtain a decision in principle, and once you have found a home or you’re happy with a remortgage product, we would submit an application on your behalf to that mortgage lender.
Most lenders will require the same basic information and being organised is one of the keys to getting your application through the mortgage process as smoothly and efficiently as possible. What you need to provide will often depend on your individual circumstances and the lender in question, however, most lenders will want to see the same basic information. Here’s a brief checklist to get you started…
What documents do I need to provide?
When you apply for your mortgage, a mortgage lender will need you to provide documents that serve as evidence of who you are, where you live, how much you earn, and probably proof of your deposit. With this in mind, you may be asked to provide:
- Photographic ID, such as your passport or driving license (note that having an old address on your driving license or an expired passport can lead to complications, so try and make sure documentation is up to date)
- Three months’ payslips (showing details of employee name, pay date and tax period, gross pay, net pay, any bonuses, overtime or commission, and additional allowances such as car allowances)
- Bank statements of your current account covering the last 3-6 months (don’t leave any gaps in the history, as this may look suspicious)
- Proof of your deposit in the form of cash savings and the source of these funds. This is usually done via bank statements, which should be in your name. If your deposit is being gifted by a relative for example, then you may need to provide some evidence of this.
Your advisor will also need to give a lender a breakdown of your current and anticipated outgoings, including how much you’re borrowing on credit cards, other loans, and childcare.
Remember, the information on your application needs to match the supporting documentation you provide. Names and addresses should match (including the spelling of names) and don’t round up your income if this doesn’t match your payslips. If you have recently changed your name, due to marriage for example, then you will need to provide evidence of this via a copy of your marriage certificate. It is often these sort of details which lead to queries and possible rejection of applications.
What about if I am self-employed?
The nature of being self-employed often means that your income is not fixed each month/year, so you may need to provide additional evidence to show how your business is faring and shed light on your financial situation. Along with the basics mentioned above, it’s a good idea to also have the following to hand:
- A minimum of 2-3 years of finalised accounts for your business (ideally) prepared and signed off by a Chartered Accountant (although we do have lenders that will consider just one year’s accounts)
- Your last 2-3 years personal tax returns (ideally 3 years SA302s and a tax overview from HMRC)
- Last 3 months personal and business bank statements
- Photographic ID with your current address on it, such as your driving license
- Proof of address (council tax, utility bill, or financial statement)
- Proof of deposit money
Is there anything else I should do before applying for a mortgage?
It’s a good idea to take a look at your credit score at the beginning of your property search. There are three main credit reference agencies in the UK – Experian, Equifax, and TransUnion. We recommend that you get a copy of your credit report and examine it carefully to make sure there is no incorrect adverse information recorded. If there is incorrect information recorded, then you should contact the relevant company to get this corrected.
If you find you have a low score, you should make sure that you are on the electoral register at your current address. Lenders use information from the electoral register to confirm things like your name, address, and residential history. They need to check that the basic information about you is up-to-date before they think about offering you a mortgage. With many lenders, it can actually hurt your credit score if they can’t find your details on the electoral register and some might even choose to simply refuse your application if they can’t find you recorded at the residential address that you’ve given.
You can also improve your score by showing that you are good at repaying a credit provider back if you have borrowed money. This needs to be in the agreed terms and on time. Some lenders place great reliance on an individual’s credit score, but whatever yours is, there will be a lender that will consider your application.
If you are an existing homeowner and you are looking to move house, then you should also get your current property valued. Arrange for a local estate agent to give you a free estimate of its current market value. It’s a good idea to get a couple of valuations from different agents in order to get a well-rounded idea of what your house is probably worth.
To calculate the money you have going forward on your new purchase, use the approximate price you would sell your home for and subtract the outstanding sum you owe your mortgage lender. The equity remaining generally is put towards purchasing your next property, however, you may want to retain some of this to pay off an outstanding loan, for decorating the next property, or to pay for moving costs.
If you’re unsure, simply speak to us here at Mortgage Light. Once we have the information we need from you, we will be able to do some calculations to work out what your maximum borrowing would be, and what you should comfortably be able to afford. From there, we’ll give you a suitable price range for your future property, so that you can begin the house-hunting process.
How can Mortgage Light help?
It can be difficult to know where to start when beginning your mortgage application. When using a mortgage advisor and broker such as Mortgage Light, it starts by coming in to meet us or picking up the phone for a chat. It’s as simple as that. From there, we’ll take control and get the ball rolling with your mortgage application. Mortgage Light are here to help you with the following:
- We’ll run through your finances with you to check that you can afford the mortgage that you are considering
- We’ll complete the mortgage application paperwork for you, so your application can be dealt with faster
- We’ll explain all the cost and features of any mortgage product we recommend, beyond just the interest rate
- We’ll recommend the right mortgage product for you.
We also have access to the whole of the market, so we will find you the right mortgage for your situation. Without the help of a professional, you might end up with an unsuitable product, which could end up being a costly mistake in the long run. You may also risk being rejected by your chosen lender because you didn’t understand their criteria or product restrictions clearly.
Why take the risk? Get in touch with our team today and let’s get started.