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Moving home? A look at mortgage assessment

Mar 19, 2015

Following new rules introduced in 2014, getting a mortgage is now harder and tougher than ever before.  You will need to go through a thorough mortgage assessment process with your chosen mortgage lender- so if you are thinking of taking out a mortgage this year here are a few pointers to help you understand the process.

Mortgage lenders must assess what level of monthly payments you can afford, so they carry out an affordability assessment which takes into account personal and living expenses as well as income.

1. Your income

This will include your basic income and then could include additional incomes such as:

  • A second job or bonuses
  • Income from pensions
  • Child maintenance payments

You will need to provide pay slips and bank statements as evidence of your income and if you’re self-employed you’ll need to provide business accounts and bank statements, as well as a SA302 certificate from HMRC. Many lenders will ask you to provide 3 years of accounts - although this can vary.

2. Your outgoings

You will need to provide information on your outgoings including:

  • Credit card balances and repayments
  • Any credit agreements/loans you may have
  • Bills such as council tax, water, gas, electricity, phone, broadband
  • Insurances – building, contents, travel, pet, life, etc
  • Essential cost of living – food, petrol, childcare, etc

Your lender may also ask for estimates of your living costs such as spending on clothes, leisure activities and holidays. They will probably ask to view recent bank statements to back up the figures you supply. If you have children, the average cost of raising a child will be taken into account.

3. Change in circumstances

Your lender will also ask you to consider whether you’d be able to pay your mortgage if things changed in the future. E.g.:

  • Interest rates increased
  • Changes to your income (e.g. pay increases/decreases)
  • Changes to your expenditure (e.g. childcare costs ending/ increase pension contributions etc.)
  • You or your partner were made redundant or became ill
  • There were any other changes to your family circumstances

4. Check your credit rating

It’s a good idea to check your credit report before applying for a mortgage as it will highlight any missed credit payments that could mean a mortgage lender may turn you down.


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