Mortgage application questions (+ 5 tips)

In this brief blog, we will cover the mortgage application questions you can expect from a mortgage lender when looking to get a mortgage.

Mortgage application questions

Mortgage lenders will have their mortgage application questions set out to figure out your mortgage affordability so they can determine if any of the products they offer will be suitable to you.

In many cases, the mortgage application questions will reveal that potential borrowers are not eligible for the mortgage products they are after.

The mortgage agreement in principle was developed to reduce the amount of time mortgage lenders pent dealing with prospective borrowers who didn’t meet their mortgage affordability requirements by providing them with a brief sample of mortgage application questions which sought to find out if they prospective borrower could get a mortgage with the mortgage lender or not.

Here are the key areas of a mortgage application questions document:

Your Income & expenses

The mortgage lender will want to know how much income you have and if it is sufficient enough to cover the monthly mortgage repayments on your mortgage. The mortgage lender will also look to find out what your expenses are so they wan work out what your monthly disposable income is. The mortgage application questions will focus more on your monthly income and your monthly expenses.

The mortgage lender will want to group this into four different categories:

Your monthly income

Your monthly committed expenses

Your monthly basic expenses

& your monthly lifestyle expenses

Your monthly income will include your salary, any bonuses, overtime pay or other supplementary income.

Your monthly committed expenses will have to do with the expenses which you must pay every month. This could be credit card debt repayments, loan repayments etc.

Your monthly basic expenses will have to do with costs you need to spend on food, clothing, transportation and basic essential needs to survive such as water bills etc.

Your monthly lifestyle expenses will be things which you don’t have to live with and can forgo. This will include gym memberships, television subscriptions, restaurants, holidays etc.

Filling in the mortgage application questions accurately will ensure that you have given the mortgage lender the best chance to work out your mortgage affordability and provide you with a mortgage in principle or mortgage offer if you are eligible.

If you use a mortgage broker then you may find that many mortgage brokers will have a mortgage fact find which they will require you to fill for them to asses which mortgage lenders may be willing to lend to you.

The mortgage application questions you answer and the mortgage fact find provided by the mortgage broker will be relatively the same.

When disclosing your income to the mortgage lender on the mortgage application questions you must ensure you are disclosing them accurately. Do not exaggerate on the bonus or overtime you get as you will be required to present your bank statements, payslips, P60 tax return and other necessary documents to reference and prove anything you state on the mortgage application questions.

This is the same case for the expenses section of the mortgage application questions. You should refrain from providing answers that are not completely accurate.

If you are unsure about the answers to a question on the mortgage application questions then inform your mortgage lender or try to look for supporting documents where you could find the answers to the mortgage application questions.

Your credit history

On the mortgage application questions, you will see that the mortgage lender will ask you about your past credit behaviour. Have you ever had a CCJ? Have you ever been bankrupt? Have you ever had a debt management plan? Have you ever defaulted on a credit account?

These mortgage application questions are very important and you should answer them truthfully to avoid having your mortgage application rejected or delayed.

The mortgage lender will also obtain your credit report and history at some point so answering the questions and not being truthful about it will mean you have just wasted our time and the mortgage lenders time.

Your debts

In the mortgage application questions you will, also see requests for information about any debts you currently have. You should list out all your debts and inform the mortgage lender.

This may be credit card debs, loan debts or other credit account debts such as your bank overdraft.

You should be very truthful when answering these mortgage application questions and the mortgage lender will be able to obtain the answers to these questions from your credit report and history too.

Your circumstances

Some of the questions on your mortgage application questions will have to do with your current circumstances

Do you have children? Do you plan to have children? Who depends on you at the moment, will that change significantly in the future?

The mortgage lender uses these mortgage application questions to figure out what the effects of your current circumstances could be for you in the future and how they may affect your ability to repay your mortgage.

Your future plans

The mortgage application questions will also include questions about your future plans. Do you plan to move homes soon? Do you plan to buy another house? Do you expect to get a lot of money from an inheritance or similar soon?

These questions allow the mortgage lender to work out what sort of mortgage product may be best suited to you within their product line.

What do lenders look for in your credit report?

When looking at your credit report mortgage lenders will be looking for your credit accounts to see how much debt you have, the amount of credit you have available to you and your past repayment history on your credit accounts.

Mortgage lenders will also look to see that the address you gave them on the mortgage application questions is the same as the address on your credit report.

The mortgage lender will also check your credit report to see if you are on the electoral roll on your credit file.

How do I prepare for a mortgage application?

You can prepare for a mortgage application by first getting the documents you may need in order. These may include:

3 months worth of bank statements

3 months worth of payslips

Your P60 tax return

Your SA302 if you are self-employed

Company accounts or self-employed accounts

After this, you will want to get suitable proof of your mortgage deposit ready.

If your mortgage deposit is being gifted then you may need to have a gifted deposit letter so the mortgage lender is assured that the mortgage deposit is truly a gift and not a loan which may mean the person gifting themortgage deposit may have a claim on the first charge mortgage.

Most mortgage lenders will want you to append at least 3 months worth of bank statements to your mortgage application questions before sending them. This will allow them to look back in your bank statements and see how much you get paid each month and if this matches what you told them on the mortgage application questions.

What questions should I ask a mortgage lender?

When seeking a mortgage the questions you should focus on asking the mortgage lender should be based around your needs and future plans.

If you want to move homes soon then you should ask the mortgage lender if the mortgage product they are offering you will have a high early repayment charge. If you want the flexibility to overpay on your mortgage then you should ask the mortgage lender if there are any mortgage overpayment limits and what they are

It is important to note that all key features of your mortgage will be displayed to you on the key facts illustration document the mortgage lender will provide you with.

Use a Government scheme

Government schemes help you reduce the amount of mortgage deposit you may need to put down, reduce the price of the property or create a structure that increases your mortgage affordability much sooner than it would have been.

Some of these include first-time buyer government schemes whilst others in this list are accessible to you even if you are not a first-time buyer.

Government schemes are not available to you if you are getting a buy to let mortgage.

The Government schemes include:

• Lifetime ISA– gives you a government bonus of £1,000 if you save a maximum £4,000 a year.
• Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
• Help to buy equity loan– gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
• Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
• Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
• Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
• Right to buy– allows you to buy your home at a discount price.
• Preserved right to buy– same as above.
• Right to acquire– similar to the above.

Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.

Use a mortgage broker for your mortgage in principle

You may want to use an independent mortgage broker to help you get a mortgage on your new home.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.

This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. 

This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application. 

Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.

It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.

Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.

They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.

This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.