Mortgage preparation: Five steps to a speedy application

With mortgage rates rising many borrowers will be trying to lock into a deal as quickly as possible before interest rates climb further.

It is being widely predicted the Bank of England will hike rates again in August when its decision makers next meet.

So, if you are due to remortgage in the next six months, or about to buy a home, getting yourself a deal may well feel like a race against time.

According to financial experts, Arbuthnot Latham, the two crucial steps towards securing a mortgage are passing the affordability assessment and then meeting the lender’s underwriting requirements.

For both these steps, however, you will need to get some information in place and dig out some crucial documents.

If you can get these things ready, you’ll save yourself a lot of time when undergoing the scrutiny of a broker and lender.

James Glover, head of regulated lending at Arbuthnot Latham, said: “The conversation we are currently having with clients is about thinking ahead. If your mortgage is on a fixed rate you should start to consider your renewal options six months in advance.”

He added: “By planning ahead, you can avoid the last-minute panic to secure a new mortgage and ensure you don’t end up on your lender’s standard variable rate (which is typically much higher than your expiring fixed rate).”

Here are five things you can do in advance to help you to lock-in a mortgage quickly and reduce the chances of a delay.

1. Provide proof of income

First off, Glover explained, you will need to provide evidence the income you have previously received will remain sustainable or that any future income 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 records.

For those employed under a permanent contract the lender will need your last three months’ pay slips. If you earn bonuses or commission they will often ask for three P60s or pay slips showing the received payments to establish a yearly average.

If you are self-employed, the lender will need to see your last three years’ tax returns (SA100s) and HMRC tax computations.

Meanwhile, director/shareholders will need to provide their company’s last three years’ accounts, to verify the income you draw is sustainable.

2. Prepare proof of expenditure

Dig out your bank statements for the last six months as lenders will need to see how your income matches up to your expenditure.

Glover said, 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,” he added.

3. Do you have evidence of existing debts?

Lenders have their ways to identify any financial commitments you already have – such as loans or car finance – but Glover said it will help if you can highlight these as part of the mortgage application process.

If you already have an existing mortgage (which will continue after the mortgage you are applying for is drawn) you will need to supply your latest mortgage statement.

For car finance, lease or hire purchase agreements you can show the signed contract. If you have any personal loans, again, the signed contract may be requested or your latest loan statement.

Lenders will also want to see your last six months’ of credit card statements.

Glover said: “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. Make sure your property details are correct

The most important information is the correct address of the property you wish to buy, advised Glover.

He added: “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. Communication is key

“Make sure your lender has your up-to-date contact details and they are aware of your contact preferences,” said Glover

“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.”