Private Banking -
Five ways to lock-in a mortgage quickly
Did you know that the most common reason for a mortgage application being delayed is that the supporting documents are not provided promptly?
With interest rates at a 14-year high, property buyers are looking to speed up their mortgage application to ensure they get the best rate.
The two crucial steps in securing a mortgage are passing the affordability assessment and meeting the lender’s underwriting requirements, both of which require several documents to be provided.
In this article, we look at ways to speed up the mortgage application process.
Five things to prepare ahead of time to reduce the chances of delay in your application:
1. Proof of income
This requirement will vary depending on your employment status and source of income, but fundamentally you need to evidence that the income you have previously received will remain sustainable or that any future income (for example: starting a new job) will continue for the foreseeable future.
This can be done through a variety of methods, such as providing copies of pay slips, P60s, SA100s or HMRC tax computations.
Your employment status will influence what evidence you’ll need to provide:
- Employed under a permanent contract: the lender will ask for your last three month’s pay slips. If you earn bonuses or commission the lender may ask for your last three P60s or pay slips showing the received payments to establish a yearly average.
- Self-employed: the lender will need to see your last three years tax returns (SA100s) and HMRC tax computations.
- Director/shareholder of your own company: the lender may request the companies’ last three years accounts, to verify the income you draw is sustainable.
2. Proof of expenditure
Most lenders will request copies of your last six months of bank statements. Lenders are looking for statements that show the income you have received versus payments you have made, therefore if you use different banks or different accounts within the same bank, you may need to provide six months statement for each bank or account.
It can also save you time if you make your lender aware of any anomalous payments you have made in the last six months; these could include one-off purchases or transfers.
3. Evidence of existing debts
Lenders have several ways to identifying existing financial commitments, but it is often easier to highlight these as part of the mortgage application process.
Below are the most common forms of financial commitments and the typical documentation required by the lender:
|Type of debt
|• Existing mortgages (that will continue after the mortgage you are applying for is drawn)
|Your latest mortgage statement
|• Car finance, lease or hire purchase agreements
|The signed contract will usually be sufficient
|• Personal loans
|The signed contract or the latest loan statement may be requested
|• Credit cards
|Your last six months statements
Each lender will have different documentation requirements for each type of financial commitment so having them all available is better than waiting for the lender to request the parts they need.
4. Property details
The most important information is the correct address of the property you wish to buy.
In addition, lenders will often want to know the property type, number of bedrooms, bathrooms, and any unique features, such as it being a listed property. One of the easiest ways of fulfilling this requirement is by retaining a copy of the property brochure (if this is online, it might be worth saving a copy to your computer as estate agents can remove them once a purchase is agreed).
5. Contact details
Make sure your lender has your up-to-date contact details and they are aware of your contact preferences.
There could be other documents required by a lender to assess and agree a mortgage, therefore the key to securing a mortgage quickly is to respond to your lender’s requests for information as soon as possible.
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Your property may be repossessed if you do not keep up repayments on your mortgage. If your income is not in Sterling, movement in the exchange rate could make it difficult for you to afford your mortgage repayments. This communication is for information purposes only and does not constitute advice, a solicitation, recommendation, or an offer to buy or sell any security or other investment or banking product or service.