Your mortgage broker is there to help you find the best mortgage deal. To achieve this, they’ll need to understand your personal circumstances and what you’re looking to achieve, whether you have any special requirements to consider from a property or lender criteria perspective, your financial history, your income and expenditure to calculate your maximum affordable loan, and your credit score to determine which lenders are likely to accept you.
The checks your mortgage broker will need to do include verifying your:
- identity
- address
- income
- expenditure
- credit score
Knowing about mortgage brokers and the checks they carry out will help make your home-buying process smoother. By preparing your documentation in advance, you’ll become one step closer to buying your home.
When meeting with your adviser for the first time, expect to be asked about your personal details, circumstances and what you’re looking to achieve. Your mortgage broker will usually ask you to complete a fact-find which covers these points.
What documents do mortgage brokers need?
To calculate your maximum affordable loan and determine which lenders are likely to accept your mortgage application, your mortgage broker is likely to ask you for the following documents:
ID and Address Verification
To validate your identity and proof of address, your broker will ask for the following documentation:
- Identification – passport, photo card driving license, national identity card or biometric residence permit
- Address – photo card driving license (showing current address), bank statement, utility bill or council tax bill dated within three months
If you don’t possess any of the above, some lenders may accept other documents.
Income Verification
To verify your income, your broker will require proof of each income source. For the following income types, this could include:
- Employed income – three months’ payslips to verify your salary
- Bonus, overtime or commission – additional payslips as well as your latest or last two P60s
- Income from a fixed-term contract – a copy of your contract, payslips and latest P60
- Self-employed sole trader or partners – latest two years’ HMRC Tax Calculations and corresponding Tax Year Overviews
- Limited company directors – latest two years’ limited company accounts or HMRC Tax Calculations and Tax Year Overviews
- Rental income – copy of tenancy agreement and three months’ bank statements showing the income being received, or HMRC tax return (SA100)
- Investment income – latest 2-3 years’ HMRC Tax Calculations and corresponding TYOs
Obviously, this list of income types is not exhaustive and each lender’s packaging requirements will differ.
Expenditure Checks
To confirm your expenditure, your mortgage broker will ask for:
- three months bank statements
- mortgage, loan and credit card statements if they’ve recently been repaid
Your income and expenditure, along with other factors such as your age and the mortgage term and loan-to-value, can be used by the specialist systems mortgage brokers use to determine your maximum loan.
Credit Scoring
In terms of your credit score, mortgage brokers aren’t usually able to perform a credit search like a lender can. But it makes it a lot easier to find the right lender and anticipate any difficulties in getting you a mortgage if they’re aware of any potential credit issues up front. We would therefore recommend you obtain a copy of your Experian credit report (there are alternatives, but Experian is used by the majority of lenders).
It’s not uncommon for customers to find out there is an issue they were never aware of when they obtain their own credit report, for example that they’ve been a victim of ID theft, defaulted on a credit commitment or received a county court judgment (CCJ). Knowing this before you start applying for a mortgage is crucial. Your mortgage broker will be able to advise you how to improve your credit score, if necessary, or identify lenders that will accept you as it is.
Decision in Princple (DIP)
After your initial meeting, your mortgage broker will be able to give you a rough idea of how much you can borrow and what it will cost. They may also be able to obtain a decision in principle (DIP) with the most suitable lender for your needs. This will give you the confidence to go out and find a property you can afford, knowing that it’s very likely your mortgage application will be approved.
