Mortgage affordability will dictate the amount you can borrow from a lender.

Affordability

Lenders must now check that you can afford the loan you propose to borrow.  This is to ensure you will have the capacity to repay the loan without undue difficulty.  This means not only taking into account your income but your outgoings including any personal loans and credit cards.

You will be asked for a list of information by any mortgage lender, so assemble this in good time.  For each applicant on the loan, you will need: –

Proof of Income

  • As an employee have your last P60 provided by your employer and your last three months of payslips.
  • If you are self-employed have your last three years of accounts together with accompanying tax assessments from HMRC.  If you have only recently started your business you may need to consult an independent broker for advice.
  • Proof of your pension from your pension provider, if you are retired.

Details of your expenses and outgoings

A detailed list of your monthly expenses and outgoings, as set out below.

Monthly outgoings

Essential Household bills   

  • Council Tax    £
  • Electricity    £
  • Gas    £
  • Water    £
  • Telephone & Internet   £
  • House Insurance    £
  • Car Insurance   £
  • Work travel costs       £
  • Food & Clothing       £              

Basic Expenditure   

  • Life Assurance    £
  • Child care    £
  • Leisure/Entertainment £
  • Mobile Telephone    £
  • School fees        £

Committed Expenditure   

  • Loans/ HP    £
  • Maintenance Payments    £
  • Other Mortgage Payments   £
  • Lease payments    £
  • Credit/Store Cards   £

Total Monthly Outgoings £

Bank and credit card statements from the last three to six months

Car finance, hire purchase or any other loan agreements

Details of the home to be purchased

You can get an agreement in principle in the first place, but the final agreement will depend on the house to be purchased and the valuation given to your mortgage lender by its surveyor.

Proof of ID and address

You will need to provide proof of your ID by a passport or driving licence.  You will also need to provide at least two proofs of your address using documents no older than three months.  These can include bank statements, utility bills, council tax, and HMRC correspondence.