Breakdown of all the documentation needed for a Mortgage Application after the MMR changes in April 2014.
In this post I will try to clarify what documents are actually need you to be able to get a mortgage. With the effect of the Mortgage Market Review (MMR) which has now come into play from April 2014 the level of documentation required by the lenders as well is brokers has dramatically increased.
Fundamentally the lender is now responsible to ensure the applicant has affordability and sustainability not only at the point of application but throughout the term of the mortgage. This has ensured lenders are now taking greater care over an application with a greater emphasis on evidence of income and expenditure together with feasibility of lending throughout the term.
PROOF OF INCOME
- Last 3 months’ payslips (all jobs)*.
- Last 3 months’ bank statements for all accounts that can accept direct debits. This should also include salary credit. If you have had a negative balance please provide proof of an agreed overdraft facility.
- Last 2 years’ P60s (all jobs). This is generally needed if you are looking to use an element irregular income such as overtime, commission or bonuses as part of your income.
Self Employed Applicants
- Last 3 years HRMC SA302s. These can be ordered by you (or your Accountant) from HRMC T: 0300 200 3310 and should be on their letterhead. These can normally be faxed the same day.
Benefits and other income
- Proof of child and/or working tax credit.
- Proof of maintenance.
PROOF OF IDENTITY AND ADDRESS
- Passport and drivers licence. Please check these are in date. If on a VISA please provide stamp confirm the length of stay.
- If the meeting has not taken place face-to-face then extra identity checks will take place by Skype. More information will be provided to you before application.
- Last month’s utility bill or credit card statements.
- Latest council tax statement.
- If you are not on the voters roll at your current address please provide a statement or bill covering each of the last 3 years.
- Last mortgage statement (all properties).
PROOF OF DEPOSIT
- Evidence showing the build-up of funds. The source of any entry over £1,000 entering into your account (apart from regular savings) will require an explanation. If any of this is a gift from a friend or relative towards the purchase see below.
- If all or part of the deposit is via a gift we will need a specific to give the deposit template completed which will be provided to you prior to an application.
a) We will need an email advising the name and relationship of the donor.
b) Last full months’ bank statement for the donor showing the funds are available.
c) Copy of the donor’s passport.
d) We also reserve the right to do money laundering and electronic ID verification checks on this person.
e) Where there are more than two donors please speak to your Mortgage Advisor.
BUY-TO-LETS IN THE BACKGROUND
- Last 3 months’ bank statements showing rental credit.
- Existing tenancy agreements for all properties that are let.
- If the property is just about to be let for the first time, please provide a letting agent’s letter advising the expecting rental income.
EXTRA DOCUMENTION NEEDED FOR ADVERSE CREDIT CLIENTS
- Copy of a recent credit report).
- Letter of explanation for the adverse credit addressed to the lender, including your full name(s), property address, and lender reference number which will be provided. This should stick to the facts and cover all of the issues (in your credit report or otherwise). It should also state why the situation occurred and why it unlikely to occur again i.e. circumstance changes.
- CCJ satisfaction certificate (if applicable).
- Bankruptcy discharge certificate (if applicable).
- IVA settlement certificate (if applicable).
ADDITIONAL INFORMATON IF YOU PROVIDING BANK STATEMENTS
- They must cover the full period requested. For example:
– 3rd Feb 14 to 2nd May 14 (from the 5th Feb 14 would be unacceptable).
- If printed online (or duplicates printed in branch), they must:
a) be via the official print option. Screen prints are unacceptable.
b) include the https web address at the bottom of every page. Most banks can talk you through this process. If they is not the option for the https to be shown every page must have a branch stamp.
c) include the bank or building society’s’ name.
d) include your full name. First name initials are unacceptable.
e) include the full account number. ****1234 for instance is unacceptable.
- Any transactions over £1,000 (apart from regular salary) are likely to be questioned by the lender so please email us an explanation. If internal transfers please also provide the statements for that account (covering the same requested period).
- Any payments to or from abroad are likely to be questioned by the lender. Please provide an explanation on an email to us.
- If you have had a negative balance please provide proof of an agreed overdraft facility.
PLEASE BE WARNED
The creation or submission of false institutional documents to obtain a mortgage is fraud and could lead you to blacklisting or imprisonment.
If you are using a Broker that says that the above documentation is not necessary please question their activity as any wrongdoing will reflect directly on you as they are operating on your behalf.
For more information about Mortgages post April 2014 please contact us on (020) 7993 2044 or alternatively complete the online enquiry on the right-hand side of this page.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Finance Brokers In London. His role is very much focused on Property financing both on residential and commercial lines.
You can call Payam on 020 7993 2044 or alternatively complete the enquiry form so he can personally get in touch with you.
Niche Advice is not tied to any bank, building society, estate agent or insurer and offers Independent Mortgage and Insurance advice.