You’re required to present various forms of paperwork and documentation when you apply for a mortgage in the UK. This is because the bank needs to be assured you are who you say you are. This documentation will also validate how much you earn and spend each month so that the lender is confident that you will make your monthly repayments. It is advisable to start collecting the paperwork you need in advance of your mortgage application as you’ll be asked to give original documentation that dates back months - and up to 1 - 2 years if you’re self-employed.
If you’re making a mortgage application in the UK, evidence will be gathered to support your formal application. Knowing what to provide and why you need it can be confusing. Here, we outline the reason that banks need each piece of information and how these documents help you with your mortgage application.
Mortgage Proof of Identification
To ensure preparedness, all documents that prove you are who you say you are must be valid and up to date.
As proof of identification, you’ll need a current and in date passport or a driving licence that displays your current address. Double-check that these forms of ID are up to date. Do bear in mind that you can only use your driving licence as proof of where you live or who you are; it will not qualify as evidence in both checks.
As proof of your current address, you can present your most recent Council Tax statement. Utility bills dated within the last 3 months are also examples of your address, as are your bank statements. Benefits letters or a PAYE coding letter from HMRC (Her Majesty’s Revenue and Customs Office) for the current year will also suffice.
You can use the following as proof of identity for your mortgage application:
- Current valid (signed) full EU passport
- Current valid (signed) non EU passport
- Current valid national ID card (non UK nationals)
- Current Full2 UK driving licence
- Current UK / EU photocard driving licence with counterpart
- Current firearms/shotgun certificate
- Current state pension notification letter
- Current benefits agency letter
- Current years HMRC tax code notification
- Current blue disabled drivers pass
- Identity card by Electoral Office of Northern Ireland
Proving Your Earnings for a Mortgage Application
When the lender gathers information for your application, you’ll need to provide evidence of your annual earnings. This enables the lender to verify you have sufficient funds to pay for the loan you’re applying for. The lender will need to see these mortgage application documents to provide them with an all-around understanding of what you earn in basic and additional salary, benefits, commissions and bonuses.
The mortgage provider will need to see your payslips – 3 months’ worth if you’re paid monthly and up to 13 if paid weekly. These documents need to include your name, employer’s name, payment date, and your net and gross pay. If you have recently moved jobs, you might need to show your P60 as evidence that you have been in paid employment. Not all lenders will require this document as part of the mortgage application, but it’s useful to have to hand.
If you’re providing bonus pay as part of your mortgage application, and your bonus is paid annually, be prepared to show 2 years’ worth of bonus payments and corresponding P60’s for each of the financial years. If you receive your bonus monthly, it will be seen on your payslips.
When including benefit payments as part of your application, you’ll need the most recent letter you have received from the Department of Work and Pensions (DWP).
For those who are self-employed and seeking a mortgage, you’ll be required to present your SA302 documents from the last 1 - 2 years. This is issued by HMRC once your annual tax assessments have been agreed upon.
Don’t forget to include any second salary documentation or evidence to support freelance work that you may do. These can all be considered as part of your earnings when providing documents for a mortgage in the UK.
Documents that Prove What You Spend for Your Mortgage Application
The financial responsibilities you have can impact your ability to repay your mortgage. If you have loans, credit card payments, school fees, or other designated outgoings each month, it can eat into your monthly wage meaning that your mortgage affordability could be reduced. To ensure you can cover the monthly payments, the lender will scrutinise your spending habits.
The lender will expect 3 months of bank statements. You must not alter, edit, or change the statements in any way. If - once they have analysed your monthly outgoings – the lender chooses to ask you questions about payments you make, be clear and honest with your reply. Not doing so can impact the likelihood of you being granted the mortgage.
You’ll need to show the lender up-to-date credit card statements and information on any loans. Know when they are due to come to an end so that you can be clear and concise with the lender about what you owe.
Once you have made your formal application and provided the potential lender with all the financial information they require, you’ll be subjected to a credit check. This will assess your financial history and determine how much of a risk you are to a future mortgage provider.
Preparedness is key when proceeding with a mortgage application in the UK. Find out what the lender considers vital and ensure you have it to hand. Start gathering this information in the months before you meet with your intended mortgage provider. This will go some way to reducing the daunting task that can be a mortgage application.
If you need further information on this topic, or to speak to one of our expert advisers, give us a call on 0330 433 2927 or enquire online.
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