When applying for a mortgage it is vitally important that you have all the correct information available to present to the Lender and also be able to provide evidence of the information supplied.
What information does a lender require ?
All lenders have different criteria but below is a checklist of the common information lenders require.
IDENTITY – Full names and dates of birth: this will include middle names and previous name if there was a change of name due to marriage or divorce. Some lenders are able to electronically verify the identity of applicant but be prepared to provide a Passport, Driving Licence, Marriage Certificate as evidence.
FULL ADDRESS HISTORY FOR THE LAST 3 YEARS – This must include full postcode and be where you have resided and had correspondence like bank statements mailed to. The lender may also require you to provide evidence of this so it is important that you keep your bank statements showing you at the declared addresses. Failure to provide this information may stop your application. Lenders will now also want to know details of dependents who will reside at the property. This can be Children or elderly relatives. Names are not normally required. This is done to establish affordability of the loan.
INCOME – Providing evidence of income is the key to mortgage lendin
*If you are employed lenders will want to see payslips and possibly your last P60. If your income is made up of basic income and overtime, commission and bonuses lenders may want to see a number of payslips typically the last 6 and possibly last 2 P60’s to show consistency of earnings.
*If you are Self employed lenders will want to see evidence of your income for the previous 2 or 3 years. This could be Tax computations (SA 302’s) supported by tax year overviews. Some lenders will want to see accounts prepared by a suitably qualified accountant. It is important that all submissions to HMRC are completed on time and upto date.
EXPENDITURE – When assessing your lending capability lenders will want to know what expenditure you already have. This will include the following. personal loans, credit card balances, car finance, hire purchase, store cards, student loans, child care costs, pension contributions and maintenance payments. Each lender will assess differently but it is important that you are able to provide the monthly payment, the name of the provider, the term remaining and the outstanding balance. If it is your intention to pay off an existing commitment before the mortgage starts the lender may require evidence of the funds to do this.
ADDITIONAL PROPERTY – If you are applying for a mortgage and you already own a property which may be rented out. Lenders will typically want to see that the property is self funding and will not impact on your ability to afford payments on your new purchase. Lenders may want to see tenancy agreements and bank statements showing receipt of rental payments. You will also need to take into consideration that it is highly likely that additional Stamp Duty will be payable and you would need to seek the appropriate advice from a suitably qualified accountant or HMRC.
DEPOSIT – Lenders can sometime require evidence of where the deposit is coming from. This may be from savings, sale of property or gift from an immediate family member. You need to be prepared to provide evidence of this to the lender or your nominated solicitor.
PAST CREDIT HISTORY – Another part of the process that the lenders will assess is what you credit history has been over the last 6 years typically. If you have had problems in the past like county court judgements, defaults, debt management plan, individual voluntary arrangement or bankruptcy it is highly unlikely you will be offered the best rates available. However there are specialist lenders in the market who may be able to assist.
These are just a number of factors that the various lenders will use when assessing your ability to lend and all lenders have different factors that they may consider.
The best option is to speak with a Whole of market mortgage broker who will be able to assess your individual circumstances and advise who is the best lender for you.
Manchester Mortgages are whole of market mortgage brokers and have been providing mortgage advice to 1000’s of customers since 2001.
Give us a call on 0161 706 0242 to discuss your personal requirements and let us help you get prepared for your house purchase.
