What documents do I need for a mortgage application? 

Applying for a mortgage can be stressful and complicated, so just like anything else, preparation is key. The documents required will vary depending on the lender’s criteria and your circumstances, but this guide provides an overview of what to expect.

Proof of income for employed applicants 

Employed basic salary: 

If you are an employed applicant with a basic salary only, you will typically need to provide proof of income such as 3 months payslips, P60s, and bank statements. However, if you receive variable pay such as bonuses, commissions, or overtime, the requirements may be different.

Employed variable pay: Eg bonus, commission, overtime: 

For variable pay, you may need to provide 3-6 months of payslips if you receive monthly variable pay or 12-24 months of payslips if you are on a quarterly or annual pay schedule. 

If you have been employed for a short period of time, are on probation, or have had a large salary increase, the lender may request a copy of your employment contract in addition to your payslips and bank statements.

A guide to commission and bonus income  

Proof of income for self-employment applicants 

Income documents required for the self-employed can vary depending on their employment structure. 

The following documents are typically required when applying for a mortgage when self-employed. 

  • Two years’ accounts: Lenders will usually ask for the company’s latest two years’ accounts to verify the director’s income.

  • Two years’ SA302s and tax overviews: These documents are issued by HM Revenue & Customs (HMRC) and show the director’s taxable income and tax paid over the past two years. They can be obtained online from the HMRC website.

A guide to SA302’s and how to download them  

  • Three months’ business bank statements: Lenders will also require the company’s latest three months’ business bank statements to assess its financial health and cash flow.

In some cases, lenders may also require additional documents such as accountant projections and references to verify the company’s financial status and the director’s income.

Proof of Identification & address 

When applying for a mortgage, lenders will typically require certain documents to verify your identity and address. These documents may include:

  • Identification documents: You may be asked to provide a copy of your passport or driver’s license. Some lenders may require you to provide a certified copy, which means that a professional such as a solicitor or notary public has verified that the document is genuine.

  • Proof of address: You may be asked to provide a recent utility bill, bank statement, or council tax statement that shows your current address. Lenders typically require proof of address that is no older than three months, but some may accept documents that are up to 12 months old like council tax bills. 

Proof of Deposit 

When applying for a mortgage, lenders will typically require proof that you have the necessary deposit to purchase the property. The requirements for proof of deposit may vary between lenders, but generally, you will be required to provide:

Bank statements: You will usually be required to provide bank statements covering the previous three months. This will show that you have held the funds for the deposit  for at least that amount of time.

  • Gift letter: If the deposit has been gifted to you by a family member or friend, you may be required to provide a gift letter. This is a letter from the person who gifted you the money, stating that it is a gift and does not need to be repaid. The letter should also include the giver’s name, address, and relationship to you.

  • Sales particulars: If you are using the proceeds from the sale of another property as your deposit, you may be required to provide sales particulars for that property. This will show that you have sold the property and have the funds available for your new deposit.

Ensure your documents are legible 

Its important to ensure that all bank statements and evidence of deposit clearly show your name. This is because lenders need to verify that the funds belong to you and have not been borrowed from elsewhere.

In some cases, online bank statements may only show the account number and not the account holder’s name. If this is the case, you may need to request that your bank provide you with a statement that includes your name. 

Bank statements

The requirements for bank statements can vary between lenders. Some lenders may not require bank statements at all, while others may require statements covering a period of one to three months.

When providing bank statements to a lender, it’s important to be mindful of the information that is contained in the statements. Here are some additional things to look out for and avoid:

  • Gambling: Some lenders may view frequent or large gambling transactions on your bank statements as a red flag. This is because gambling can be seen as a risky behaviour that may impact your ability to make mortgage payments.

  • Over spending: Lenders will typically review your bank statements to ensure that you are managing your finances responsibly. If your statements show frequent overdrafts, overdrawn balances, or if you are living close to the edge each month, this may indicate that you are living beyond your means and could struggle to make mortgage payments.

  • Missed payments: If your bank statements show missed payments on any of your financial commitments such as credit cards, loans, or bills, this may indicate that you have a history of financial difficulties and could be a red flag to the lender.

In general, it’s a good idea to review your bank statements before submitting them to a lender. If you notice any red flags or concerns, be prepared to explain them to the lender and provide any additional information or documentation that may be required.

Credit report 

Obtaining a copy of your credit report is not always a requirement when applying for a mortgage, but it can be a good idea to do so for several reasons:

  • Check for errors: Credit reports can contain errors, and these errors could negatively impact your credit score. By obtaining a copy of your credit report, you can review it for accuracy and dispute any errors that you find.

  • Understand your creditworthiness: Your credit report provides a snapshot of your credit history and current credit status. By reviewing your credit report, you can get a better understanding of your creditworthiness and identify areas where you may need to improve your credit.

  • Improve your credit score: Your credit score is an important factor that lenders use to determine whether to approve you for a mortgage and what interest rate to offer you. By reviewing your credit report and taking steps to improve your credit, you may be able to increase your credit score and improve your chances of getting approved for a mortgage.

Download a copy of your credit report

  • Prepare for lender enquiries: Even if obtaining a copy of your credit report is not required, lenders will still typically check your credit as part of the mortgage application process. By obtaining a copy of your credit report ahead of time, you can anticipate any potential issues that may arise and be prepared to address them with the lender.

Overall, obtaining a copy of your credit report can be a helpful tool in the mortgage application process. It can help you identify and correct errors, improve your credit score, and prepare for lender enquiries.