Advice Column: Documents needed when applying for mortgage

Hello and welcome to the October edition of my monthly advice column.

That’s been a whole year I’ve been doing this column, where has the time went?

Hope everyone is finding it informative and helping you prepare if you’re looking to get a mortgage.

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This month I want to explain the different documents you might need when applying for a mortgage.

The winter nights are drawing in quickly, so you may be spending a bit more time indoors and this should give you the chance to get things in order in time for that all important mortgage application.

It’s one of the most common questions I’m asked from clients when applying for a mortgage – what documents do I need to send you?

The answer is always different! It depends on your personal, financial and employment situation, so a mortgage broker will know exactly what a lender might ask for once you’ve had your initial appointment.

There are of course documents which usually everyone needs to provide, which is proof of identification and address, proof of income and proof of deposit/equity.

There can be others depending on your situation, I’ll just cover off the common ones today.

Proof of ID and address will usually be required in the form of valid passport and/or driving licence.

This allows your broker and lender to verify your identity so they know that it is you applying for the mortgage and not someone trying to impersonate you.

Other things like utility bills, Council Tax letter or even bank statements can be used for proving your address.

Proof of Income can come in many forms depending on your employment status.

If you’re an employee of a company then it’s easy, your last three months payslips will be sufficient.

If you’ve just started a new job, or about to start one, then a lender may ask for a copy of your contract or an employer reference to confirm your salary and employment status.

If you’re self employed and set up as a sole trader, this means you would usually need your last two years tax calculations and tax overviews which HMRC can provide.

If you’re a Director of a Limited Company, then generally it’s your last two years accounts that’s needed and the tax overview and tax calculation to show your personal income taken from the business.

A very small number of lenders will accept one year’s evidence of the above if you’ve been trading less than two years, but most will require two years.

Proof of deposit will be required in most cases and also by your solicitor, this is to evidence where the money is coming from.

If you’ve managed to save up the deposit yourself, then the last three months statements of the bank account it’s held in is usually sufficient.

A lot of clients just now are getting Gifted Deposits from their family, so your mortgage broker may need the last three months statements for your family members bank account and get them to sign what’s called a Gifted Deposit Letter, stating they are giving you the money.

If the deposit is coming from the sale of your existing home, then your latest mortgage statement should be sufficient.

Some may also ask for a copy of your agreed sale price confirmation – this then shows the equity you will have to put down on the new house.

It’s always wise to remember that every scenario is different, the documents above are the most common items a lender and your broker will ask for, so if you’re thinking of looking into a mortgage soon, put your feet up in these cold, dark nights and make a start on getting these things together.

I hope that’s been useful and see you all next month.

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