Applying for a mortgage can be a herculean task to undertake. We will talk about how to apply for a mortgage. We will cover topics like what lenders check to see if you can afford a mortgage,how to prepare your application,how you spend your money among other things.
How to apply for a mortgage.
Asked anyone who have applied for a mortgage and they will tell you that it is laborious activity where you will have to fill forms and provide lots of information.
However, this process can be simplified if you know what lenders need and prepare yourself appropriately.
So How do lenders check I can afford a mortgage?
To be able to determine if you can afford a mortgage, lenders go a long way to work out the following.
They work out your household income. This includes income sources like basic salary, other income sources like second job, bonuses, commissions among others.
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Affordability determination is a huge requirement for you to get that mortgage. They will also take into consideration your household bills as well as a spending account. They will also determine your other issues like debts which include loans and credit cards.
All these are to ensure that you have the ability to meet the monthly mortgage repayments.
They will not just stop there, but will credit check you with a credit reference agency. This will be done after you made a formal application.
So How do I prepare my mortgage application?
This is a question which has been asked a number of times. It is advisable to check with the credit reference agencies.
You can check with these three main credit reference agencies namely Equifax, Experian and Credit Karma.
The good news is that you can do these checks online. You can choose to do this with the free online service or the paid subscriptions. You however check that you input the correct information about your self.
What documents do I need to use to apply for a mortgage?
To be able to apply for a mortgage successfully, you must collect the following documents in order to make your application successful.
The documents to collect include the following as sourced from moneyhelper.org.uk:
- utility bills
- proof of benefits received
- P60 form from your employer
- your last three months’ payslips
- passport or driving licence (to prove your identity)
- bank statements of your current account for the last three to six months
- statement of two to three years’ accounts from an accountant if self-employed
- tax return form SA302 if you have earnings from more than one source or are self-employed
- self-employed people should look to provide information alongside their tax return, which supports what the SA302 says about their income, such as bank statements.
You must be careful to ensure that the “information on the application form matches the documents you give them”.
You must for example ensure that your salary amount you quote should be exactly as the one in the payslip.
You should also provide a detail information about the property you are buying, the estate agent helping you and the solicitor at the center of the transaction.
You need to also know that online printouts of vital documents like current account and utility bills might be rejected.
So what should I do, you may ask? You will need to show hard copies or have certified copies from your solicitor, your bank or your utility provider.
Does How I spend my money matter in mortgage applications?
Yes, it does.You will be required to show outgoing expenditures like how much you have borrowed from either your credit cards or loans.
Other bills like the under-listed will be required.
- utility bills
- Council Tax
- insurance policies, and
- general living costs such as travel, childcare and entertainment.
Now that you know how to apply for a mortgage, you may like to refer this post to a friend who is about applying for a mortgage and you will be doing them a great favour.
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