Mortgage lenders carry out a number of checks and will ask for certain documents when you apply for a mortgage.
Ensuring that you are prepared will help you have the widest possible choice of lenders and can also help to speed things up. Oak Tree Mortgages have prepared this list to assist clients in identifying areas they may need to work on before applying for a mortgage.
Use this checklist to help you prepare:
- Your Passport – is this in date? Does it show your current name? If you were married more than six months ago and your passport still shows your previous name, a mortgage lender may not accept this as a valid form of ID. You can apply for a new passport online at www.gov.uk/renew-adult-passport
- Your Driver’s Licence – does this show your correct name and the address you currently live at? It’s free to change address. You can also do this online at www.gov.uk/change-address-driving-licence
- Are you on the Electoral Roll at your current address? – Mortgage lenders place great importance on you being on the Electoral Roll. You can register to vote online at www.gov.uk/register-to-vote You will need your National Insurance number to complete the online form.
- Do you keep your payslips? The mortgage lender will probably need to see at least three months’ payslips. Are you keeping these ready for your mortgage application? Do your payslips show your correct address? Is your name correct on the payslip?
- Have you kept your P60? This is the document issued to you by your employer at the end of the tax year; the lender may ask to see this.
- If you are self employed, are your accounts up to date? A lender will not accept accounts that are more than 18 months’ old. You should ensure your latest accounts are up to date and be prepared to show your accounts when applying for a mortgage. Make sure you know your log in details so you can download proof of income from the HMRC website.
- Are your bank statements easily available? The mortgage lender may need to see these. If you receive statements by post, start keeping them ready for your application. Keep all pages, including the cover page. Does your bank have your correct name.
- Is your bank account in good order? If you have an agreed overdraft, this is generally acceptable. If you exceed your overdraft limit and then incur charges, this can lead to problems when applying for a mortgage. Try and run your account within the agreed terms, remaining within any overdraft limit. Where an overdraft is used, lenders normally prefer you to remain in credit for at least half of the month.
- Do you use Pay Day Loan companies? This can be off-putting to a mortgage lender. We would advise anyone looking to take a mortgage out to avoid using Pay Day Loan companies.
- Will the address used by your bank or credit card company cause confusion? If your bank, credit card company or mobile phone company write to you at a different address to where you currently live, this may cause confusion and lower your credit score. You should try and ensure your address matches the address where you live. If you still have bank statements sent to a relative’s address, you should consider changing these over to your current address.
- Do you have credit cards you no longer use? A mortgage lender will take account of the credit limits you have on all of your credit and store cards. Having lots of cards can lower your credit score. Consider closing credit or store cards you no longer use.
- Do you have a high credit limit on your credit card that you don’t need? Having a high credit limit can lower your credit score; consider asking your credit card company to lower the limit.
- Do you only make minimum payments on your credit card? A mortgage lender might draw the conclusion that you are living beyond your means. You should consider making an additional monthly payment each month so you pay more than the minimum payment.
- Do you withdraw cash on your credit card? If you use an cash machine to withdraw cash or if you transfer funds from your credit card to your bank account, a mortgage lender may consider you live beyond your means. Avoid doing this if you are considering applying for a mortgage.
- Are you paying your credit card and mobile phone on time? Where you have to make a manual payment, it’s very easy to forget to pay your phone bill or credit card statement on time. This would be frowned upon by a mortgage lender. Set up a direct debit to ensure the minimum payment on a credit card is always collected on time. If you want to pay more than the minimum payment, you can always make a manual overpayment. You should also ensure your mobile phone bill is paid on time. The easiest way to ensure this is to set up a direct debit.
- Is your credit file in good order? If you have any worries about your credit file or you just want to check your information is up to date, consider obtaining your credit file. Checking your own credit file does not lower or damage your credit file and can reveal inaccuracies. You can obtain a copy of your credit file free; www.noddle.co.uk
How we can help you prepare
Our Consultants can help you prepare to apply for a mortgage. We use our knowledge of different Lenders to help you avoid the frustrations of applying to a Mortgage Lender where you may not meet their lending criteria.
We can also assist in preparing you to buy a house by obtaining a ‘Decision in Principle’ or ‘Mortgage Certificate’, vital if you want to prove to an Estate Agent that you should be able to get a mortgage. A Decision in Principle does not constitute a formal mortgage offer. In the current market, most Estate Agents will not accept an offer from a buyer without a Mortgage Certificate.