The requirements for a mortgage application has changed since the last decade. There is a growing need for mortgage lenders to vet borrowers than ever before. A lot of factors will influence the types of documents you will present.
For instance, a self-employed individual will provide a different set of documents compared to an employee working in an organization. It’s imperative to stay organized as lenders will find this trait impressive. Taking this step will also reduce a considerable amount of time and stress.
Ensure that you prepare the following documents to be on the safer side.
1. Bank statements
One of the reasons why lenders will check bank statements is to confirm whether your down payment has been sitting in your account for a while.
Apart from the bank statements, other documents your lender may be interested in to assess your risk profile include investment assets or life insurance.
2. Gift letters
Certain loan programs support clearing down payment with gift funds. You won’t have any issue if your loved ones give you money to buy a house. However, the donor may need to write a statement indicating that the cash is a gift instead of a loan.
Remember to include the exact amount of money and how the individual is related to you.
3. Utility bills
Make sure you prepare the original and recent document for your mortgage application. Alternatively, you can offer your driving license or passport as proof of address.
4. Credit history
It should be noted that a lender won’t go through your credit report without your approval. The lender will take a look at your credit score as it has a huge impact on your interest rates.
Get ready to give a valid explanation for any foreclosure, late payments or any other issues on your credit report before the application process.
It’s likely for lenders to ask for payslips that’s at least 3 months’ worth. They usually come in handy to evaluate your current earnings. The online version is acceptable but it should contain your personal information. Try to get them ready so that the mortgage application process can be fast.
6. Tax returns
Tax returns usually offer an insight into a borrower’s financial state. Mortgage lenders expect at least three years of tax returns to confirm that your yearly income is consistent. Your SA302 form will reveal your tax breakdown. Confirm whether a cover letter from the HMRC is necessary.
7. Self-employment documents
If you’re a freelancer or self-employed, have it in mind that you will add other documents when applying for a mortgage. This will increase your chances of getting approved for a Limited Company Director Mortgage. Here are some of the important documents you need:
- Profit-and-loss statement.
- List of business debts.
- A valid photographic ID.
- 2-3 years worth of personal and business tax returns.
- Your balance sheet for the past 2 years.
Every document you submit must be accurate to avoid any issues. There are other documents you may need but this is a good place to start.