So, you’ve got through the hard part of saving up for your deposit (or got the green light from “Bank of Mum and Dad”) and made the decision to become a home mover in Birmingham. What’s the next step? Simply put, it’s time to get yourself organized for a mortgage.
We’d recommend speaking to an experienced Mortgage Broker in Birmingham as early on in the process as possible, so you know how much you can borrow for a mortgage and how much it will all cost.
Obtaining an up to date credit report should also be at the top of your list, you don’t want a meaningless squabble with your mobile phone provider holding you back from buying a home. Taking the above two steps will give you a meaningful expectation of how possible this is going to be and what your budget is. This will further help you organize your accounts such as existing credit cards and mobile phone contracts.
Your Mortgage Broker in Birmingham will obtain a fully credit-checked Agreement in Principle on your behalf but you’ll have to prove who you are, where you live and how much you earn. There really is loads of paperwork for you to get together so it’s a good idea to open a file for yourself and start collecting everything in advance in order to get yourself ahead of the game.
To make sure you are who you say you are, you’ll need to produce some photo ID such as a Driving license or passport in order to prove your identity.
In addition to the above, you’ll need to prove where you live. You’ll need to produce a utility bill or original bank statement dated within the last 3 months of your current address.
The analysis of your spending habits has become one of the most important determining factors in whether you’ll qualify for a mortgage or not. Your bank statements should evidence your income and regular expenditures. Lenders will not be happy to see gambling transactions on your account. Nor will they like it if you go over an agreed overdraft limit or if your direct debits bounce regularly. It’s best to think ahead of time when considering your bank statements, the more organized they appear, the more likely you are towards getting accepted.
You will have to prove you have the funds in place for the deposit and also evidence this for anti-money laundering purposes. Try not to move monies around your various accounts too much as it will make evidencing the audit trail more difficult. Lenders like to see your savings building up so you’ll need to account for any large credits into your accounts.
Quite often money for deposits has been gifted by family members. These funds need to be evidenced also and the “donor” will need to sign a letter. This is to confirm it’s a non-refundable gift, not a loan.
In terms of affordability, the most important thing is to be able to prove your income as this will let the Lender know if you are able to keep up with your mortgage payments. If you are employed this tends to be by way of your last 3 months’ payslips and most recent P60. Lenders can take into account regular overtime, commission, shift allowance and bonus.
If you are Self Employed in Birmingham then you’ll need your Accountant’s help. This will be to request your last 2 or 3 years’ tax overviews and calculations (SA302) documents from HMRC.
It’s a good idea to do your homework when getting organized for a mortgage. Write down an estimate of your anticipated outgoings after you move house. You can work out an idea of how much the council tax and utility bills will be. In addition to that, you can work out your regular expenditures, such as food, drink and leisure activities. This will demonstrate how much disposable income you have available to pay your mortgage.
As you can see from the above, it’s a real paper trail when you are applying for a mortgage but if you want your application to run like clockwork you’ll need to put the time aside to get everything together.
It’s better to get all this at the outset and collate everything that the Lender could possibly ask for. As this saves time and frustration later down the line. If you’re subsequently asked for paperwork you could have had ready at the outset.