When applying for a mortgage we’ll ask some important questions; while this might sound daunting, unlike a job interview, the questions are all pretty standard and you’re unlikely to be delivered any curve balls. We simply ask these questions just to assess your situation and best match you to a lender. Nevertheless, the best way to make the whole process of applying for a mortgage less painful; is to make sure you are fully prepared.
To give you the heads up, we have a list of the 6 most common questions you’ll be asked. We’ll also explain what information you need to answer them and how you can prepare; even months before the application to ensure you get that all important thumbs up from the lender.
1. How much do you earn per year?
Your income is a crucial factor that all mortgage lenders will take into consideration to determine how much they’re prepared to lend you. If you are applying for a mortgage with someone else in a joint application; your income will be calculated together, and you will be required to evidence your pay through pay slips.
If you are self-employed you will have to produce at least one year’s accounts. It’s essential you’re honest and upfront about your income; as you will have to provide proof of this later down the line.
2. What do you spend your money on?
Don’t feel like we’re judging you here; as in addition to your income, your monthly outgoings are a big indication of how much you can afford to pay back each month.
This includes everything from bills and food shopping to leisure activities and hobbies. You will also be asked for bank statements showing where your money is spent each month.
3. How much debt do you have?
Much to the surprise of a lot of people, owing money isn’t actually a bad thing in some cases. In fact, if you have an outstanding loan (depending upon the amount) that you’re paying off; it could work in your favour. This means that the lender will be able to see that you’re capable of paying off a certain amount each month and keeping up with the money you owe.
In short, all lenders want to know is that you can securely afford to pay back whatever they decide to lend you.
4. Do you have, or are you planning on having, any children?
There’s no two ways about it; but children are expensive. Mortgage lenders need to factor in any children you have or may have in the future.
If you do have children or any other dependents; you need to be able to demonstrate how you’re planning on budgeting to meet their needs, while paying off the mortgage repayments in the process.
5. What’s your credit history?
This is a very common question that you’ll be asked by every mortgage broker as your credit score and credit history play a huge role in whether you’ll be accepted for a mortgage; so be prepared for questions about them both.
Did you know that even if you miss paying a bill by a few days, it can impact your credit score? In the build up to applying for a mortgage, make sure you do everything that you can to ensure your credit score and history are in good enough shape to be accepted for a mortgage.
6. What’s the value of the property you want to purchase?
The difference between the value of the property and the size of the loan is known as the loan-to- value (LTV) ratio.
Whilst it might sound complex, it’s not; your deposit that you have saved will be factored into to this as well. For example, if a property is £100,000 and your deposit is £20,000, your loan to value would be 80%. Depending upon the size of your loan to value, it will give you access to certain mortgage deals on the market.
Here at The Residential Mortgage Hub we’re an independent whole-of-market mortgage broker and have successful experience with a wide range of mortgage clients and applications including complex cases. We can help you throughout the whole application process and beyond, advising you on the products you’re eligible to apply for and have the highest chance of approval; so please don’t hesitate to get in touch for further mortgage advice.
