Applying for a mortgage can be a somewhat daunting and stressful experience. The following article will give you some idea of what to expect and explain how a good broker can help with the process.
Why have things changed recently?
The credit crunch has made lenders approach mortgages with much more caution than they did previously. This means they look at your income and expenditure in more depth than before, and especially whether you could afford to carry on paying your mortgage if interest rates were to rise.
It is part of a lender’s job to make sure that the mortgage is affordable not just now but also in the future.
You can find out more about this in our blog ‘Why we've started to ask for more detail in mortgage applications’.
What documents will I need?
The list of things you will need will vary from lender to lender and depend on various factors such as amount of deposit and credit score, however as a starting point it would be worthwhile getting the following items together:
If employed:
- Latest 3 monthly or 8 weekly payslips
- Latest P60
- 6 months bank statements
If self-employed:
- 3 years accounts or tax returns (SA302’s)
- 6 months personal and business bank statements
Both employed and self-employed clients may also find lenders want your latest mortgage statement or proof of rental if the payments aren't shown on your bank statements. You may also be asked for more documentation if you have irregular income such as bonuses or overtime.
What are your monthly outgoings?
It should come as no surprise to you that a mortgage lender will want to know about what you spend each month. Some examples of monthly outgoings a lender or broker might ask you about are:
Do you have any dependants?
One thing that you are sure to be asked when applying for a mortgage is the number of people in your life that depend on you to look after them. This could include children, the elderly or the disabled.
Do you have any regular monthly outgoings?
Lenders will also consider what commitments you have in place, this includes things like loans, credit cards and overdrafts as well as child care costs, pension contributions and travel costs.
Other costs
Don’t be surprised if the lender questions other costs on your bank statement as well, including satellite TV, mobile phone contracts and the cost of running your vehicle.
Taking these figures into account should give a realistic picture of what disposable income you have available.
Credit score
Whenever you are applying for any type of loan or finance, your credit history will come into question. A mortgage is no exception.
Lenders will check your credit history as part of the process, as well as asking you about any payments you may have missed in the past. Before starting the application process it’s worth checking your credit file for free here so you can be sure the details are correct.
Help and Advice
Using a broker can help you find the most suitable mortgage based on your circumstances as they will be able to search the market for you and help you find the best deal. Here at London and Country we offer award-winning, fee-free mortgage advice. To speak to an expert adviser call us today.
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
