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Mortgage Underwriting

In April 2014 The UK went from one of the least regulated mortgage markets in the developed world, to the most rigorously regulated- and this is a GOOD thing as it ensures responsible lending.

Mortgage Underwriting

In April 2014 The UK went from one of the least regulated mortgage markets in the developed world, to the most rigorously regulated- and this is a GOOD thing as it ensures responsible lending.

However, we are very aware that many people- depending on their demographic- believe that attaining a mortgage is something similar to threading an elephant through the eye of a needle!

We don’t think it’s quite that difficult, but that’s probably because we do it on a daily basis. That said, we also recognise that the Mortgage Underwriting process can be intimidating to those of us who are less familiar with it- primarily because of all the documentation required to “tick the boxes”, so-to-speak.
With that in mind we have devised a handy checklist below which explains all of the documents that are likely to be required if you are looking to attain a new mortgage.

Proof of Identification

We find that Passports (or National Identity Card’s if you are not a UK National) are best, but Driver Licenses can also be used provided they hold your correct address (and many do not!).

If you are unfortunate enough to have neither then there are some alternatives: -

  • Original Birth certificate (not a certified copy issued by your local Town Hall).
  • CIS4 Photographic registration card.
  • Firearms or Shotgun Certificate.
  • Original Notification Letter from a benefits agency (such as DWP).

Proof of Address

This can be remarkably bothersome given so many of us do everything online these days, and because the list was devised in the year 2000 by our UK Government Home Office (when online banking was in its infancy and the likes of British Gas sent us monthly statements in the post!) and it has never been updated since.

If you are applying for a joint mortgage this means one document each (we know it’s annoying but joint documents can only be used for one person).

The best documents to verify your address are:-

  • Latest annual Council Tax Bill (or Rates Collection Bill in Northern Ireland)
  • Utility Dated in the last 90 days – this can be an online one (if a properly formatted PDF) but cannot be a Sky Bill or a Mobile Phone Bill. Gas, Electricity, Water or Landline only.
  • Bank Statement or Credit Card Bill dated in the 90 days – again, this can be an online one on the proviso that its fully branded and formatted correctly in a PDF.
  • Latest annual Mortgage Statement.

If you have none of those then we suggest the following alternatives: -

  • Driver License (if the right address and you are using your passport to verify your Identity).
  • Solicitors letter dated within the last 90 days confirming a recent house purchase.
  • Council or Housing Association Rent Card or Tenancy for the current year.
  • HMRC Self-Assessment Letter or Tax Demand dated in the current financial year.
  • NHS Medical Card.
  • Electoral Register Entry.
  • Call your bank and ask then to post you a bank statement.

Income Verification

We will need at least latest three month’s personal banks statements that demonstrate your income being credited and your regular bills and spending being debited. If you use more than one account, we’ll need statements for all of them (sorry). The good news is that all lenders will accept properly formatted online copies (i.e. not MS Excel spreadsheets or a “transaction list”).

We have a guide (which includes most major banks) on how to produce these documents on your online banking portal- just click HERE and you’ll be able to access it.

The actual income-documentation required to fully verify your income will depend on your employment status.

If you are Employed
We will need three months payslips and you latest P60. If you have been employed for less than a year, then the last payslip from your previous employer should be fine.
If get bonuses/commission on a monthly or quarterly basis we need the last three payslips for the months these bonuses/commissions were paid to you.

If you receive an annual bonus, then we need the last one- and ideally the last two- payslip(s) for the month of the year when you received your annual bonus.

If you are a Limited Company Director (or own more than 20% of the company you work for)
We will need your last two years full Annual Company Accounts (abbreviated Accounts won’t work).

We will also need your last two year’s Tax Calculations (which HM Revenue & Customs call an “SA302”) and the corresponding Tax Year Overviews.

If you are a Sole Trader or Partner in a Partnership
We will need your last two year’s Tax Calculations (which HM Revenue & Customs call an “SA302”) and the corresponding Tax Year Overviews.

Please click HERE for some help on what these Tax Documents look like and the boxes they have to tick to satisfy the lenders.

Please ask your accountant for them, they should be able to help. If you don’t have an accountant (or prefer to attain them yourself) you can do so at the Gov.uk website, HERE

Benefit Income
Many lenders will take some- or all- of your benefit income depending on what it is and how long it’s likely to be paid for. If you simply provide us with your benefit award document that is normally enough to verify this part of your income.

Pension Income
This depends on the type of pension. If it’s the State Pension- or a defined income occupational pension or annuity- then your latest annual pension award letter should suffice. However, if you access your pension income by way of “flexible drawdown” (which is now very common for personal pensions and workplace pensions) then we will need the latest annual statement from the provider and a valuation-statement dated in the last month.

Proof of Deposit/Savings

This is something that simply has to be substantiated in order to comply with Anti-Money Laundering regulations- and your solicitor will need to substantiate these, too. The documents needed will depend on where your deposit is coming from.

Personal Savings
For traditional deposit sources like personal savings, most lenders will want to see the money building up in your bank account over a period of time- i.e. at least three months but fote can ask for statements over a year old to verify the build-up.

Alternatively, if you have the money invested in an investment account, then the latest annual statement along with a recent valuation-statement will be perfect.

Sale of a current property
If you are a next time-buyer, we simply need to record the sale price of your current home- which can be verified by way of providing your Memorandum of Sale from your selling agent.

Sale of a previous property
We’ll need the latest three months bank statements covering the period- ideally displaying the money arriving from your solicitor (if not then we’ll need the historical one showing the credit into your bank account). We will also need the completion statement issued to you by your solicitor.

Remortgage (to raise capital) of an existing property
Again, we’ll need the latest three months bank statements covering the period- ideally displaying the money arriving from the solicitor that completed the remortgage (if not then we’ll need the historical one showing the credit into your bank account). We will also need the completion statement issued to you by your solicitor.

Gifted Deposit
Lenders tend to be happy with gifted deposits from close family members such as parents, grandparents and siblings. In this instance we will draft a letter for you to ask the donor to sign it confirming the value of the gift, that it is non-refundable and that they will hold no financial interest on the property. Of course if it is repayable, that’s also acceptable for a small number of lenders- if this is the case then be sure to tell us as soon as possible and we can plan ahead for that, too.

Inheritance
In this instance we will need bank statements to show receipt of the inheritance and a copy of the deceased’s will. If they died intestate (with no will) then a letter from the Administrator of their Estate will need to drafted- we will happily do this.

Conclusion

As you can see, there are one or two pitfalls when producing and providing documentation to support the Mortgage Underwriting process, but we are here to guide and assist every step of the way- it’s why we are here.

The vast majority of the time if the lender receives all of the documentation they ask for- and are happy with the inspection of the property in question- it results in receiving a fully approved Mortgage Offer within 2-3 of Full-Application submission.

Get in Touch

Whether you are a private individual, business owner, existing client or a new enquiry, we are very happy to hear from you. You can call or email our office as detailed below or alternatively complete the contact enquiry form below.


email info@oneallfs.co.uk

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