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Our property investment expert is Neil Bishop, Head of Residential Mortgages at
Mortgages for Business
www.mortgagesforbusiness.co.uk/
Tel: 0345 345 6788
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Question
What documents do I need to take out a mortgage?
My partner and I are about to buy our first house and we are looking at our mortgage options.
My dad tells me we’ll need to supply various documents – passport, bills etc – what exactly will we need? Also, will we need a credit report and how will we access this?
Answer
This can vary depending on which lender you are dealing with, but typically speaking, you will need to provide the following:
– Most recent three months’ payslips for all applicants
– Most recent three months’ bank statements for all applicants, showing salary deposits and regular outgoings
– Most recent three years’ SA302s and supporting Tax Year Overviews for all self-employed applicants
– Most recent three years’ business accounts (if self-employed)
– Most recent three months’ business bank statements for all self-employed applicants
– ID – this can be a driving licence or passport
– Full completion of a fact-find (or similar)
For further guidance on what you need to provide, speak to your broker.
A credit report is not always necessary but can be a very useful tool for lenders to assess your current credit commitments. They will also be looking to see if you have any adverse credit (late or missed payments) and to check that your electoral roll details are updated.
You can obtain your full credit report directly from Experian or Equifax. CheckMyFile can provide you a report collating three credit reference agencies’ findings.
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Question
Can I include secured loan in my remortgage?
I took out a loan as an addition to my mortgage last year to purchase some land at the back of our house. I’m due to remortgage early next year – can I repay the loan to the new mortgage?
Answer
This may be possible! Speak to your broker, as the affordability of the loan will need to be reassessed to include the borrowing for the land.
The overall loan to value will also need to be considered, so it’s best to seek expert advice first.
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Question
What is a decision in principle?
I’ve just registered with an estate agent and as a first-time buyer I am feeling a bit confused. They asked me whether I had a ‘decision in principle’?
I thought they were referring to the house – but I now understand it is connection with the mortgage.
I told the estate agent I did not have one and they suggested it would be helpful for me to get one. Please can you help! I have no idea what it is or how I get one. Thank you.
Answer
A decision in principle is used by lenders to determine whether the mortgage will be affordable and to check your credit score. As such, there are two aspects to securing a ‘Dip’.
Firstly, lenders will perform an affordability assessment based on your income and outgoings. They will use their own criteria and stress rates against your application to check that you can afford the mortgage you’re applying for.
Secondly, lenders will perform a credit check to see if you have adverse factors on your file. These can range from a single missed payment to a report of a previous bankruptcy. Each lender will have its own limit to how many adverse factors they will allow on a credit file before refusing to lend.
If both of these checks come back okay, then the ‘dip’ should come back as a pass. Speaking to a professional mortgage broker will help you to find the correct lender for your application and maximise your chances of obtaining a ‘pass’ result.
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Question
How do I choose a mortgage broker?
It’s been suggested to get a good mortgage deal I need to speak to a broker. I have started researching brokers and there are so many to choose from.
How do I find one to help me? Should I go for someone small and local to me or will I get access to more mortgages by going to one of the bigger brokers?
Answer
Given the current market, using a mortgage broker, even just for some advice, is essential. Rates are rising, and lenders remain hesitant about how to price their offerings, so sourcing the right deal for you is more important than ever.
Your best option is to contact a ‘whole-of-market’ mortgage brokerage. They have access to all the lenders on the market, who can suit different circumstances.
Other brokers will work exclusively with a panel of lenders, so they may be limited in what they can offer you and, in turn, unable to help with your specific circumstances.
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