Are we all ready for some cheese?
The secret to a good mortgage application is like your home… It is all in the foundations. If the foundations are right, then everything “should” go smoothly.
What do we mean by foundations?
In essence it is just a case of getting the basics right. If you are employed with no overtime, no benefits etc then all should be relatively straight forward. If your income is made up of bonuses, commission, overtime etc then it can get a little more confusing.
Some lenders will use 100% of the additional income, some will use 50%. But 50% or 100% of what?
We have lender who will off your P60 income, some lenders will average out your last 3 or 6 months payslips. Some lenders will use 100% of your average bonus if paid monthly but only 50% if paid annually.
If we end up submitting the wrong income figures, when the underwriter checks over everything there are going to be questions and potentially a reduced mortgage offered, which might put a spanner in the works.
This is one that is really easy to be caught out by. If you plan on clearing some debt prior to completion, 99% of lenders will ignore that debt. However there are 2 big mortgage lenders who will not. That means they will assume it will remain and so it will be counted in your affordability. This is also the case where you have recently cleared the debt, but it has not yet updated on your credit report.
Likewise, there are other commitments people do not think about – your mobile phone contract for example. A lot of the time you have one direct debit but part of it goes towards the phone contract and the other goes towards the handset loan. This is one that is quite common to miss.
This is without doubt the biggest. If I had a pound for every time someone said they have no bad credit and we submit an application only for it to be declined because of negative markers on the credit report. This is why we now ask for a credit report from every applicant. It just prevents us wasting time, you having unnecessary credit checks and ensures we have those good foundations in place.
This is a catch all for anything else. Examples here can include:
- Recently started/due to start a new job – it may not be for every lender.
- Child maintenance – again, it may not be for all lenders depending on different factors.
- An unusual property.
In short it is anything that falls outside of the norm, we need to check with the lender before applying.
What do we do?
We ask you to complete a factfind and send us your credit report and documents. We rely on all of these documents to some extent, but the amount will vary depending on your circumstances and the lenders we are looking at. Some lenders will not ask for bank statements, others will go through them line by line and add up all of your transactions.
We will go through your credit report and look for anything you may be unaware of or forgotten about.
Prior to submitting your application we will check over everything, we will write a list of issues and run these by the lender. We may even write the underwriter a letter explaining everything in more detail so that when they sit down and underwrite your case, they have a little more meat on the bone so to speak. We find this works well as it can avoid them coming back with a shopping list of questions.
As we said, a good application is all in the packaging (or foundations). We tend to find even the most complex of cases can go to offer first time if everything is explained well and the information collated properly. Taking a little more time at the outset can save time in the long run as it avoids the need to go back and forth waiting for underwriters to pick up the extra information and review it.
This is more for us to deal with as your brokers, but ultimately we ask you to give us the truth, the whole truth and nothing but. Trying to hide things or hope they do not get picked up is where things start go wrong. We work for you, so we want you to get your mortgage as much as you want to.
Hopefully that gives you some insight into what we do, its not just a case of plugging the figures in and applying. The bulk of our work goes into the research stage.