Mortgage application details you need to have in advance

By Natasha Culzac

Don't be overwhelmed by the prospect of applying for a mortgage. Read our simple guide on what you'll need to provide

So you’ve been browsing home porn, homes that could be yours, and you’ve got fire in your belly. The next step is to meet with a mortgage advisor and see how your financials stand up to scrutiny. But what documentation will you need to provide?

Wait, stop!

Before you start printing off whole forest's’ worth of statements and bills, go online and check your credit report with every single one of the three main credit reference agencies: CallCredit, Experian and Equifax. These guys hold a wealth of information on you. They even track you. It’s these dudes who lenders - most importantly your mortgage provider - goes to, to see how well your finances have fared for the last six years.

Make sure they don’t hold any erroneous information for you, such as a wrong name, address or non-payment of a bill which you did in fact pay.

Don’t forget that if you are financially associated with someone (because you once had a joint account), their credit score can affect yours. You need to disassociate yourself from people you no longer have any financial links to. To learn more about what lenders know about you from your report, read our guide here. Then read about the practical steps you can take to improve your score.

Okay, back to business.

The understandably mountainous list of documents you will need to provide is below, and relates to each person applying for the mortgage:

One proof of identity and one proof of address: For example you can give your passport for the former and your driving licence for the latter, but you can’t use one item for both identity and address. They also need to be valid, so get them renewed if they’ve expired. Utility bills are, as usual, perfect for address verification.

Proof of income: For employed people, this should be simple enough. You’ll need three months’ worth of payslips and at least one year’s P60, preferably two just in case. You can also show any annual bonuses you’ve been awarded for the last couple of years, if the amount changes your income significantly. If you’re self-employed, you’ll need to provide your tax calculation from HMRC (known as an SA302), which shows your earnings. If you can provide this document for the last three years you will be home dry. However, some lenders do accept two or even one years’ worth of tax returns. If you have an accountant (get you!), you can get them to state what your recent earnings have been.

Bank statements: You will need three to six months’ worth of statements from your current account. You may also need to show your savings account. Some lenders won’t accept printouts, only posted statements.

Proof of benefits: If you’re in receipt of benefits, such as tax credits, and this makes up part of the income which you’re declaring, you will need to show the lenders this information.

Proof of deposit: You may be asked to prove that you can indeed pay the deposit, by showing bank statements or, if it’s going to be a gift from say a family member, a signed letter from the donor confirming this. If the donor lives outside the UK, they may be asked to provide bank statements to prove they have this money.

Etc: You can never have too much evidence to back you up! If you have a good employment contract (or, if you’re self-employed, offer of future work from a client), deliver a copy of that up! The same goes for any life or income protection insurances you’ve got. If you have debt, you will probably need to show evidence of how much you owe, and you may even need to show where your disposable income goes. If you haven’t already, make sure you start saving all those annoying posted bills.

And remember: all documentation should have the same address on them. If they don’t, get them changed before you hand them over.

The dreaded news

If, after all this hassle, you’ve been declined your mortgage, what should you do?

Firstly, do not just go to another lender and repeat the process – the more mortgage applications you do, the worse this will look on your credit report and the lower your credit score will get, further exacerbating the problem.

There are a number of reasons you might get rejected for your mortgage:

Poor credit score – again, the importance of a good credit score cannot be overstated. Even if you don’t want to buy right now but are thinking about potentially buying in a year or two, now is a fantastic time to spruce up your credit report ready for when you do want to make the leap.

Inadequate earnings

Too much outstanding debt

Previously taken out payday loans

Incorrect information in your application

The steps you can take to remedy a declined mortgage application include:

Ask the lender why they denied you the mortgage. Use this as guidance and set about improving/changing whatever it was.

As previously mentioned (ad nauseam!), make sure that all your credit reports are accurate and up-to-date. On your report, you can issue a ‘notice of correction’ on any missed payments, which is a short statement by you explaining what went wrong, for example if you became temporarily unemployed due to injury.

Get yourself in tip top financial shape by putting all bills on direct debit (so you never miss a payment).

Pay off more as much outstanding debt as you can

Register to vote

Don’t make any further applications for credit in the coming months (including for things like car/furniture finance).

Top Takeaway

Mortgage applications are scary things but with enough preparation, you should be able to smash it. An interesting point made by HomeownersAlliance is that you should actually start applying for your mortgage well before you start even looking for a pad. If you can go as far as getting a ‘mortgage in principle’ from a lender, you’ll know exactly what you can afford and you’ll have the edge on any competition who hasn’t even so much as got their printer fired up. Unsure of what kind of mortgage you’ll need? Read our guide here. An independent mortgage advisor should be able to tell you which lenders are best suited to your circumstances – the ones that’ll give you the best chance of success and the best deals.

Author bio: Thanks to a journalistic career history and a childhood at Sylvia Young Theatre School, Natasha has her fingers in a few professional pies, doing her best impression of a model and actor as well as personal finance writer. Outside of work she compulsively watches BBC period dramas and constantly lies to herself that this year will be the year she learns French, once and for all.

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