When you are thinking about buying your home it is a very exciting time, but it can also be a stressful one too. There are certain things to consider such as deposit amounts, fees, mortgage approval (a Mortgage Agreement in Principle). This article is a basic guide to help you and focuses on 5 things that you need to organize / arrange to help you get your mortgage approved and buy your new home.
Proof of Income
You will no doubt be aware that you will need to produce recent wage slips if employed or tax calculations and overviews, if self-employed. The lender will want review and assess your income to ensure that the mortgage you need is affordable.
Top Tip – ensure that you can prove your income and have either your last 3 months pay slips and P60 available. Or is self Employed ideally 2 years tax calculations and overviews. Have your last 3 months pay-slips or tax calculations and overviews to hand before you apply.
Proof of Deposit
As a borrower, you will need a deposit to purchase your home. Typically, a minimum deposit of 5% would be needed (as a minimum). However, within the Covid 19 Pandemic, many lenders increased their minimum to 10 or even 15%. It is worth noting that the larger the % deposit generally the lower the interest rates on offer from the lenders.
Lenders will also accept gifted deposits from close family members, who would like to help you get on the property ladder.
Top Tip – be able to prove your deposit and where it has come from. All deposit funds will need to be verified from where the funds are coming from and who, so you will be asked to provide evidence of where the deposit has come from and identify the people gifting the money.
Your Credit Rating / Profile
The credit profile of all borrowers will usually be considered. However, this is dependent on the lender, most high street lenders will generally require your credit profile to be in good order. If your credit score has been affected by missed or late payments, defaults or CCJs it is likely that you will not be accepted by high street lenders and you may need to approach a more specialist lender.
Top Tip – the higher your score, the better your chances of borrowing success. So, it is important to ensure that you maintain a good credit profile. Generally, the better you credit profile the more likely you are to gain a mortgage and potentially a lower interest rate. Register yourself with a credit reference agency, review your profile, correct any errors and work on improving your status (if needed).
Employment
Lenders want to ensure that any mortgage offered is affordable both now and in the future. Stability of employment and income, as well as not trying to overstretch your borrowing requirements will assist in gaining your mortgage approval. This applies to both employed and self-employed mortgage applicants.
Lenders will generally be sceptical of 2nd jobs, especially where the new job has only been taken on recently. A short term 2nd job can be viewed by the lender as “staged Income”, meaning that the lender may suspect that a job has only be taken on to try and improve the size of the mortgage loan available. Self-employed applicants will with most lender be required to provide 2 years tax calculations and overviews. So, you will generally have had to submit 2 years of Tax Assessments. There are though a few lenders who may consider 1 years of confirmed figures.
Top Tip – be realistic about how much you want to borrow. Lenders affordability calculations differ greatly, therefore speaking with My Mortgage & Protection Experts and getting them to confirm your maximum loan will put you in a more informed position. Other Documentation
Other documentation will also be required, such as proof of identity and proof of address. A valid in date passport or Driving License are ideal, make sure the documents are valid.
Make sure that you are registered on the voter’s role where you live. Also, make sure that things like your driving license have your latest address on as well as other household bills.
Top Tip – make sure your ID and Proof of Address are in date. Proof of address supplied to support a mortgage application will be required to be dated within 3 months of the application. Get organised and have all your documents to hand prior to arranging your mortgage.
Typical Supporting Documents Required (per applicant, where applicable)
- Latest 3 Months Bank Statements
- Latest 3 month Pay Slips or 2 years Tax Calculations & Overviews (if self-employed)
- Proof of your address (typically a household bill)
- Proof of your Identity (Passport or Photocard Driving License)
- Proof of Deposit Funds
Ultimately, if you have everything that the lender requires, and you are in a strong, solid situation financially, you have a good chance of getting your mortgage Agreed in Principle.
Final Top Tip – review all the Top Tips, get your documents organised and available. Then speak with a professional mortgage broker like My Mortgage & Protection Experts Ltd. A professional broker will be able to guide you on a wide range of lenders, meaning you get access to a wider range of products and rates. Equally all lenders have different lending criteria and affordability calculations. Speaking to us could improve your chances of getting the mortgage require.
If you would like to find out more about mortgages for you or would like to find the best mortgage deal for you, contact us today on 03300 94 94 09, or visit our mortgage calculator.
