How a mortgage lender helps you during your mortgage interview
As part of getting a mortgage, you’ll need to have a detailed interview. But don’t worry. This will help establish what you can afford, without stretching yourself. After all, buying a property could be one of the biggest purchases you ever make.
Why do you need a mortgage interview?
In recent years the rules governing getting a mortgage have changed. At their core, they aim to make lenders more responsible with their lending – and make sure customers can afford what they’re borrowing. Not just now, but in the future too, especially if interest rates go up or their circumstances change.
What to expect at your mortgage interview
Generally, you’ll have your interview before submitting your mortgage application. Your interview might take place in one go, or over a few shorter sessions to collect all the necessary information. It can also be done face-to-face or over the phone, and usually lasts between 1 and 3 hours.
Don’t be put off by the level of detail the mortgage broker or lender will want to go into. Think of it as a session where they’re getting to know you. Ultimately, the aim is to help you choose the most appropriate mortgage for your current needs and circumstances. While also taking into account your future plans.
At the end of your session, you should have a clearer sense of your finances and understand whether you can comfortably afford your mortgage.
What to bring
Proof of income:
If you’re paid through an employer, bring your:
- Last three payslips
- Last three months’ of bank statements
- Proof of any bonuses or commission you might have received
If you’re self-employed you’ll need to provide:
- last 2-3 years of signed accounts
- self-assessment tax return
- last 3 months of bank statements
You’ll also need to verify your identity and address. To do this bring:
- valid photo ID, such as a passport or photocard driving licence
- a council tax statement, current bank statements, credit/debit card statements, or other utility bills, from the last 3 months
If you’ve gone paperless with your bank statements, it’s worth checking, as bringing a print-out from the internet isn’t always acceptable.
What’s more, if you’ve been at your current address for less than 3 years, lenders will want your previous address or addresses too.
Do some preparation
Part of the interview’s purpose is to:
- establish you’ll be a responsible borrower
- work out how much money you’ll have available after all your commitments
- work out how much you could be comfortable spending on a mortgage
In order to do this, you may be asked about your monthly expenditure. It can be a good idea to do a little bit of preparation, so you can feel confident with the amounts you spend in the following areas:
Keep in mind, that some of the documents you bring along to the interview can be used when you send your application. They will be returned to you.
This is what you regularly spend on the things you cannot do without:
- food, gas, electricity and other heating costs
- water bills, telephone, essential travel costs (such as travel to work or school runs)
- council tax, buildings insurance (it’s a condition of your mortgage that the building is insured)
- ground rent and service charges (for leasehold properties)
- household cleaning and laundry
Basic quality of living costs
This is what you spend on occasional essentials:
- household goods (such as furniture and appliances) and repairs
- personal goods such as toiletries
- basic leisure costs including non-essential transport, and TV subscriptions
Repayments and other commitments
This covers other payments you know you’ll have to make, including:
- debts you’re paying off, like credit card bills, loans or hire purchase payments
- child maintenance or alimony
The exact details you’re asked for will vary between lenders, but you should expect to discuss your regular spending in all these areas.
Your credit history is an important part of the process. This helps the lender decide, based on your previous borrowing activity, whether you’ll be able to repay what you owe.
During your interview, you’ll be asked if you’ve ever had a County Court Judgment or any other Court Order for non-payment of a debt. If you have, this could affect your application, but don’t worry. Speak to your mortgage adviser or the lender’s representative about what to do. They can advise you, and if they can’t help, another lender may well be able to. It’s always best to get advice.
You’ll also be asked if you’ve ever been in arrears for a mortgage, rent, loan, credit card or store card. If you’ve had a property repossessed, been refused a mortgage or credit. Or if you’ve ever been declared bankrupt or insolvent. Again, don’t worry. Speak to your mortgage adviser or the lender’s representative about what to do.
Origin of deposit
Generally, lenders will want to know where your deposit is coming from.
If you’ve saved up for it, bring a bank statement from your savings account. Or if you’re getting help from your parents or anyone else, you’ll need a letter from them stating whether the money is a gift or a loan.
Some of the other questions you might be asked can feel a bit personal. But keep in mind that the lender or mortgage adviser is simply trying to understand your current situation and how future plans might impact what you can afford.
After all, part of the interview’s purpose to make sure you won’t be stretched now or further down the line. So you could be asked some of the following:
- Do you expect your income to go down?
- Do you expect your regular expenditure to increase?
- Do you have any children or other dependants?
- Do you have any plans to leave your job, start a business or become self-employed?
- Have you ever taken out a payday loan?
- Do you expect any other changes to your personal circumstances?
Generally, lenders will have an upper age limit after which they’re less likely to lend. However, if you expect to have an income, you may be able to take out a mortgage in your retirement. If this is the case, you’ll also be asked about your pension arrangements.