To secure a mortgage, documentation is essential. Lenders require proof to verify the details you provide, which helps them determine your eligibility for a loan. We guide you through this process, connecting you with suitable lenders and ensuring a smooth journey to receiving your mortgage offer. Here are the six crucial details lenders seek:
- Identity: Who are you? This covers your full name, date of birth, and nationality.
- Residence: Where have you stayed? Provide details of your current and past addresses.
- Income: Do you have the means to repay the loan? Is your income stable and ongoing?
- Expenditure: How do you manage your finances over time?
- Existing Liabilities: What are your current financial obligations? After addressing them, how much do you typically have left?
- Credit History: Based on your past financial behaviors, will you likely honor your mortgage repayments? Is lending to you a sound risk?
Bear in mind, securing a mortgage often means borrowing significant sums over long periods, even up to four decades. The ideal lender for you may not be familiar with your financial profile. Thus, they evaluate the risk associated with lending to you.
Why do we need these documents from the outset?
We’re seasoned in this field. We can identify potential challenges in your documentation — nuances like student loans deducted at source, name mismatches in passports, the address on your driving license, or determining your debt-to-income ratio, to name a few.
By collecting all necessary documents at the onset, we can accurately determine your borrowing capacity, identify which lenders are most suitable, and even provide a ballpark figure on the rates. Once you secure your Agreement in Principle (AIP), you’re in a prime position to place offers on homes.
Imagine finding your dream home, negotiating the price, only to be blindsided by mortgage hurdles. Or being pitted against other potential buyers and losing out due to unpreparedness. That’s why it’s vital to be mortgage-ready.
The list below outlines the general documents you’ll need. While it’s comprehensive, lenders might request additional documents based on specific cases. It’s paramount that:
- Your name and address remain consistent across all documents.
- Bank statements, pay slips, savings accounts, passport, driving license, utility, and council tax bills all bear the same name and address.
This consistency ensures a seamless verification process.
Documents can be downloaded or scanned and emailed to ourselves (photos will not be acceptable, however there are a number of mobile scan applications available to use if you do not have access to a physical scanner). Please ensure that documents are in a PDF format as otherwise these may be rejected by the lender.
We can only use two documents as valid proof of identity: an up-to-date, signed passport or a current photocard driving license. It’s imperative that the ID you provide is an official government-issued photo document to confirm your identity.
If you are using a Passport that shows a previous surname please also provide a wedding certificate or deed poll certificate confirming the changes. If using a driving licence as your proof of ID, please ensure it reflects your current address and correct name.
Remember, failing to inform the DVLA about a change in your address can result in a fine of up to £1,000. Thankfully, updating your address with the DVLA is free of charge.
For confirming your address, we will require at least one of the following documents:
- UK photocard driving licence (either full or provisional).
- Full UK driving licence (old paper style).
Documents issued within the last 12 months prior to application:
- Confirmation of state or local authority funded benefits (examples include housing benefit, child benefit, tax credits, pensions, educational grants, winter fuel bill).
- Local authority council tax demand letter or statement.
- HMRC tax notifications such as Notice of Coding or statement of earnings. (Note: P45s and P60s aren’t valid as they aren’t official HMRC documents).
- Court instructions appointing an individual, such as from the Court of Protection or a Grant of Probate.
- Annual Mortgage Statement provided by a UK-regulated financial sector firm.
- Letter from a Nursing or Care Home, on official letterhead, confirming residency.
Documents issued within the last 3 months prior to application:
- Official statement or letter from institutions like Bank, Building Society, Credit Card company, Mortgage lender, Life Insurance provider, or Investment firm, which indicates an existing relationship. This document must be issued by a UK-regulated financial sector firm.
- Utility bill (mobile phone bills are not acceptable).
- Local Authority, Housing Association, or Public Letting Agency tenancy agreement or letter.
- Solicitor’s letter detailing a recent house or land purchase, which should also mention both the current and prior addresses.
For mortgage lenders, your recent earnings typically provide a snapshot of your regular income. Here’s what we require:
- Monthly Salary: Please provide your latest three months’ payslips.
- Four-weekly Salary: If you’re paid every four weeks, submit the past four months of payslips.
- Weekly Salary: If you’re paid weekly, share your most recent 13 payslips.
Note: If the address displayed on your payslips isn’t current, consult your employer or HR to update your address details.
Additional Income Sources: If you receive regular supplemental income, such as overtime, bonuses, commissions, or enhancements, and wish to have it considered, please provide:
- Bonus (Quarterly Payments): The last four quarters’ bonus payslips.
- Bonus (Annual Payments): Payslips from the past two years that detail the bonus.
- Overtime/Commission/Enhancements: Will be included as part of the three payslips already requested.
It’s essential to provide evidence of this supplemental income to ensure lenders recognise its regularity and sustainability.
Mortgage lenders typically evaluate your self-employment income over a period to ascertain your earnings. Here’s a breakdown of their general approach and the documents we require:
Most lenders take an average of your income over the last two complete years of self-employment, but practices vary.
Required Documents: (Please provide all 3)
1. SA203s from the Last Two Years: Also referred to as a tax calculation, this document outlines your earnings. You can retrieve these from HMRC or request them from your accountant. Note: Some lenders might also ask for SA100s.
2. Tax Year Overviews for the Last Two Years: These confirm that you’ve settled your income tax with HMRC for the corresponding years. Again, you can obtain these from HMRC or your accountant.
3. Business Bank Statements (Last Three Months): We require these to match the income declared on your tax documents to the earnings deposited into your business account, illustrating the sustainability and consistency of your income.
To validate your income and how you spend your money lenders will want to see copies of all current accounts. Here’s a detailed guide to help you provide the correct documentation:
- You must provide at minimum the last three full months of bank statements.
- A helpful tip: Think of it as obtaining the current month-to-date statement plus the three preceding months.
- Ensure you download statements in PDF format. Excel or CSV files aren’t suitable since they can be edited.
How to Determine Which Statements to Provide:
- For instance, if it’s mid-May, you’d provide the May month-to-date, April, March, and February statements.
- Even if it’s towards the end of May, you’d still need the same: May month-to-date, April, March, and February.
Aligning with Your Pay Cycle:
- Remember, bank accounts may not necessarily run from the 1st to the 31st of each month. Hence, ensure your bank statements match the salary credits shown on your payslips.
- The most straightforward method is to access your online banking and download statements as PDFs.
- Note: Some banks might not support this feature on mobile apps, necessitating use of a PC. If you encounter difficulties, you can usually find guides by searching “how to download [Bank Name] bank statements” online.
Differentiating Between Bank Statements and Transaction Lists:
- Bank statements typically feature your name, address, and complete account details.
- A transaction list often only includes some account details and might not have your address.
- Bank/Savings Account Statements: You’ll need statements from at least the past three months showing where the funds have been held. Some banks might not readily offer these. In such cases, you might need to request physical statements or visit a branch for printouts.
- Gifted Deposit: If you’re obtaining a deposit gift from family, they’ll typically need to sign a declaration stating it’s a gift and not a loan, which means they won’t have any stake in your property. If this is applicable please let us know and we will send you the relivant template.
Time to start your mortgage journey?
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