This second blog from Andrew Montlake at Mortgage Broker Coreco focusses on how to get a mortgage and tips on how you can simplify the often daunting process.
Mortgages are not rocket science. However, lenders do like to wrap up a relatively simple process into a more complicated, jargon-heavy transaction that can leave you frothing at the mouth halfway through the process when they ask you for another piece of paper! How do you get a mortgage these days? One word. Paperwork!
To ensure a smooth process, it really is all about having the correct paperwork. Getting it right day one can literally save days, but we often see clients struggling with paperwork. Don’t get us wrong – our clients are smart, organised people, but paperwork is a complicated business.
Bringing the documents is the easy part – the challenge is making sure you’ve got the right documents. We’ve encountered so many applications that we had to delay due to paperwork and every time it hurts our fickle emotions. We are far happier when we’re helping people get their new homes with minimal stress and delay.
In that spirit, we offer this guide to the paperwork you’ll need to bring with you when making your mortgage application. So, in order of importance (not really, they’re all important!):
1. Three months payslips
We’ve no doubt you’ve kept hold of at least a few of these. They’re the good kind of paperwork – the kind that shows proof of you getting money. Hopefully you’ve got the last three months of these available, but if you don’t, you can talk to your employer and they should be able to get copies. We also know that in this digital age many of you just get online payslips, (we hate paper too, so that is cool with us). Just make sure the print offs are authentic and clearly show your name and the name of your employer. This doesn’t apply to you if you are self-employed, of course, but don’t worry we’ve got you covered.
2. P60 from previous tax year
A P60 shows your total earnings from your job or pension in the previous tax year and will help a lender to take into account any bonus payments you may have received. A two-year record is even better! If you have lost yours, you can approach your employer and ask for a new one, or if you’re really intimidated by the HR person, call the tax office.
3. Three Months Bank Statements
Lenders are going to need empirical proof of your financial situation, so keep hold of your bank statements. They will need to be authentic documents, however, so print outs may not cut it. It’s safe to bring the original documents they post to you, or if you’re paperless you should be able to get your bak to print out a copy with the bank’s stamp.
If online print outs are the only option then please ensure they clearly show each transaction, your name and account number, (we need to know these are actually your statements), as well as the https address clearly visible.
You’ll need the last 3-6 months to show for your application, as well as any savings account statements to demonstrate your total available finance.Oh and by the way, 3 months does mean 3 months, even if there is a days gap or one statement missing it will not cut the mustard with the lender.
4. Other sources of Income
If you have/are receiving any government benefits you’ll need to provide evidence of this. If you’re earning from more than one source – or are self-employed – you’ll need to provide your SA302 tax return form too, along with supporting documents.
5. Proof of address
Your current address, obviously, not your prospective one. You don’t live there yet. Proof of address is often a surprisingly difficult document to provide; usually because people assume it’s the easiest bit and then leave it until last minute. We recommend keeping hold of your utility bills and including them in your application. Ideally we need an original bank statement or utility bill dated with the last 3 months. Your current council tax bill is also perfect.
If you have moved around a bit, some lenders do ask for proof of address at your last place, so it is always worthwhile keeping one bill on file.
You know how it is – we need to make sure it’s really you! We know how mad you’d be if someone that wasn’t you tried to get a mortgage in your name. This might seem obvious right now, but we need your real passport. We can’t work off a scan or a photograph of it any more than we could work off of a crayon drawing of it or how it looks in our imagination.
7. Any credit cards or loans
We’ll need to know how your credit rating looks because it will be a major factor in how we proceed. We also need to know what expenses you already have in repaying your debts so we can establish what you can afford.
We recommend keeping track of your credit rating; several things can affect your score that you may not know of, such as not registering to vote. This will help the lender find you when they do a credit search. After all, they can’t lend to someone they can’t find!
8. Proof of deposit
If you are purchasing your new home the lender wants to see that you have the money for the deposit, i.e. the difference between the mortgage amount and the purchase price. A bank or savings account statement is fine.
If you have pestered a family member long enough for them to have kindly agreed to gift you some or all of the deposit then we will need a letter from them confirming this. They will need to confirm that it is indeed a gift, that it is not repayable by way of monthly payments and that they will have no share in the property. Oh, and we will also need to see a statement from them showing they have the cash in the bank.
If you don’t have an employer because you’re self-employed, you won’t have access to some of the documents provided for those that are employed. For instance, you won’t have a P60, and while you may have 3 months of pay slips as an employed director, if you have a shareholding of 20% or more lenders will treat you as self-employed and want to see accounts.
Often you’ll need to provide two or even three years of accounts and, as mentioned earlier, you’ll need to provide your last 2 or 3 years SA302’s as well. These can be obtained from your accountant or the Revenue directly.
It will help enormously if your accountant is properly qualified, for example ACCA, rather than just a bookkeeper.
Keeping track of all this is difficult, and we appreciate that it’s not easy to provide everything right away. But if you have been organised and meticulous you’ll get feedback on your application much faster. We recommend keeping your documents in a safe place to keep them organised.
Your home may be repossessed if you do not keep up repayments on your mortgage.
A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £495.
Read more of Monty’s blogs on the Coreco website here