Preparing Your Financial Documents for a Mortgage Application
The best way to understand how a mortgage application works, is by breaking it down into the individual processes involved. One of these will include the submission of financial documentation and although it can be done fairly quickly – it’s still vitally important as far as the potential for approval is concerned.
Banks and lenders take their finances very seriously and if they have any doubt whatsoever that a borrower won’t be able to pay back what they are owed – the chances are that they will reject the application outright. This is why it’s so important to ensure that your paperwork is up to date and easily understood.
How can you properly prepare your documentation?
The first thing that we advise our clients to do, is to hire the services of a financial expert or a mortgage broker. These specialists will have a greater level of understanding regarding the types of documentation that will need to be submitted to a lender, as well as the way in which they will need to be prepared.
Alternatively you could opt to go it alone and take care of the paperwork yourself, but in our experience the results can be far more effective when hiring the services of an agency that specialises in these activities. To prepare your own documents however, you’ll need to provide a physical document that details your net earnings (after tax), as well as a total sum of your annual expenses.
There may be some instances where an applicant won’t possess the standard 3 years’ worth of tax reports, net earnings and expenses – and in these instances, a lender will typically request formal documentation from a chartered accountant. If you fall into this category of applicants, then you will be required to wait a full tax year before applying, whilst being able to provide a projection from your accountant that will act to predict your financial income for the two years ahead.
If you’ve been working for more than three years, then you will simply need to provide individual documentation that identifies your net earnings, expenses and other financial transactions, on an annual basis. Your bank will then compare these amounts and calculate whether they sum that you wish to borrow will be within your budget, as well as whether or not you will be able to cover the costs of your repayments; minus your typical monthly expenses.
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