Mortgage application documents tend to be long, detailed and, frankly, very tedious to complete. It is, however, very advisable to take the time to complete them properly. This will allow the potential lender to go through the checking process in the shortest possible time. When completing the application, remember that there are five key questions the lender needs to have answered.
Who are you?
You’ve probably heard of identity theft. Hopefully, you’ve taken steps to reduce your likelihood of falling victim to it. If not, now would be a good time to research and implement preventative measures. Lenders also need to take preventative measures to make sure that they do not end up giving money to fraudsters. In short, therefore, be prepared to prove your identity.
Can you afford the mortgage?
This is an obvious question but these days it generally requires a very detailed answer. That answer typically starts with your credit score, but it doesn’t end there. It’s strongly recommended to keep an eye on your credit score even if you’re not thinking about applying for credit. You should certainly do everything you can to maximise it when you’re applying for a mortgage.
Firstly, make sure that your credit record is free of errors. Secondly, make sure that you’re on the electoral roll at the address you’re using for your application. Thirdly, see if there are any obvious “quick hits” which could improve your score. For example, do you have credit cards you never use but which are still open? If so, close them.
After all this, expect to have to show details of your current outgoings. Then expect to be quizzed over how they might change during the lifetime of the mortgage. If you do have any compelling reason to think that your financial circumstances might improve significantly then make sure to mention them, just remember to back up any claims you make.
What is the source of your deposit and income?
If your deposit has been built purely out of your personal savings, then proof of income will normally be sufficient. If, however, it includes gifts, an inheritance, the results of capital gains or anything non-standard (e.g. a gambling win), then you will need to be prepared to show the source of the money.
If you are in regular employment, then proof of income should be fairly easy. If you are in self-employment, then you can expect to need to show tax returns. You may, however, need to answer further questions. This would typically be the case if your income was noticeably higher than would be expected for someone in your line of employment.
If this is the case, then you will probably be aware of it yourself. It would therefore be sensible to explain it on the application and, of course, provide any supporting evidence.
Could anyone else have a claim on your assets?
The defining feature of a mortgage is that it is a loan secured against property. This means that the lender automatically has a certain level of protection against defaults. If someone else could have a claim on that property, the level of protection is reduced. You may still be able to get a mortgage, but the lender may lower the amount they are prepared to offer.
Can you be trusted?
In addition to checking your credit score, you might also want to have a look at your record with National Hunter & Cifas. These are two fraud-tracking databases. Hopefully, it will be completely blank. As with credit records, however, errors do happen, although they are extremely rare.
If you do find yourself erroneously listed on one of these databases, then it’s vital to take action immediately as it can have major repercussions.
Your property may be repossessed if you do not keep up repayments on your mortgage.