Wondering how you can best prepare for your mortgage application? Here’s the inside track on the most common questions you’ll be asked so you can do your homework well in advance
Taking out a mortgage means undergoing a bit of a grilling when it comes to your finances as lenders investigate whether you are a good prospect.
While it might sound daunting, unlike a job interview, the questions are all pretty standard and you’re unlikely to be delivered any curve balls.
Nevertheless, the best way to make the whole process less painful is to make sure you are fully prepared.
To give you the heads up, experts at www.onlinemortgageadvisor.co.uk have revealed a list of the six most common questions you will be asked.
They’ve also explained what information you need to answer them and how you can prepare – even months before the application – to ensure you get that all important thumbs up from the lender.
1. How much do you earn per year?
Your income is a crucial factor that all mortgage lenders will take into consideration to determine how much they’re prepared to lend you.
If you are applying with someone else in a joint application, your income will be calculated together, and you will be required to evidence your pay through pay slips.
If you are self-employed you will have to produce at least one year’s accounts. It’s essential you’re honest and upfront about your income as you will have to provide proof of this later down the line.
2. What do you spend your money on?
In addition to your income, your monthly outgoings are a big indication of how much you can afford to pay back each month.
This includes everything from bills and food shopping to leisure activities and hobbies. You will also be asked for bank statements showing where your money is spent each month.
3. How much debt do you have?
Much to the surprise of a lot of people, owing money isn’t actually a bad thing. In fact, if you have an outstanding loan (depending upon the amount) that you’re paying off, it could work in your favour, as the lender will be able to see that you’re capable of paying off a certain amount each month and keeping up with the money you owe.
All lenders want to know is that you will definitely be able to pay back whatever they decide to lend you.
4. Do you have, or are you planning on having, any children?
Children are expensive – there’s no two ways about it. Mortgage lenders need to factor in any children you have or may have in the future.
If you do have children (or any other dependents for that matter) you need to be able to demonstrate how you’re planning on budgeting to meet their needs, while paying off the mortgage repayments in the process.
5. What’s your credit history?
We all know that credit score and credit history play a huge role in whether you’ll be accepted for a mortgage, so be prepared for questions about them both.
Even if you miss paying a bill by a few days, it can impact your credit score. In the build up to applying for a mortgage, make sure you’re doing everything you can to ensure your credit score and history are in good enough shape to be accepted for a mortgage.
6. What’s the value of the property you want to purchase?
The difference between the value of the property and the size of the loan is known as the loan-to- value (LTV) ratio.
Your deposit will be factored into to this as well, so if a property is, for example, £100,000 and your deposit is £20,000, your loan to value would be 80%. Depending upon the size of your loan to value, will give you access to certain mortgage deals.
