Your proof of income for a mortgage
When getting a mortgage the mortgage lender will usually want to see your proof of income. This is not usually done at the mortgage in principle stage but rather after and just before the mortgage lender is ready to make you a mortgage offer.
When accepting proof of income for mortgages, most mortgage lenders will only accept original documents and not screen prints or photocopies.
What do I need to prove my income for a mortgage?
Different mortgage lenders will have different requirements to the proof of income they may require for a mortgage but generally, the below documents will be accepted as proof of income for a mortgage.
If you are paid through PAYE you will be required to provide your payslip for up to 3 months.
If you are paid weekly through PAYE you will have to provide the previous 12 weeks payslips
You will also need to provide 3 months worth of bank statements showing the proof of income coming into your bank account
You may also need to provide your p60 form showing your income for the tax year
Other sources of income
Mortgage lenders may usually accept other sources of income but they may have different limits as to how much of that income they will attribute towards your mortgage affordability.
Some may accept 90% of a particular source if income e.g child benefits while others may accept 100%.
If your proof of income is mostly from other sources as per below then you may want to inform your mortgage broker so they find mortgage lenders who may accept other sources of income.
If you have other income which comes from a various number of sources then you will need to provide proof of income for a mortgage taking into account those sources. Some examples below.
If you have income coming from a pension fund or scheme then you will need a pension statement on a letter headed paper from the pension provider.
If the income is coming from a court order e.g maintenance payments then you will need to provide the court order as proof of income for your mortgage.
If your source of income is a trust fund then your proof of income for a mortgage will need to be a tax assessment letter and a written confirmation from an accountant of this source of income.
If your income is from a benefit such as:
- Attendance Allowance benefit
- Carer’s Allowance benefit
- Child Benefit
- Child Tax Credit benefit
- Disability Living Allowance (DLA)
- Incapacity Benefit (IB)
- Industrial Injuries Benefit (IIB)
- Maternity Allowance benefit
- Pension Credit benefit
- Severe Disablement Allowance
- Widow’s Pension benefit
- Working tax credit benefit
Then, in this case, you will need to evidence through your bank statements that the benefit income is regular before it will be accepted as a proof of income for your mortgage. You may have to submit up to 12 months worth of bank statements to evidence this.
The mortgage lender will also like to know the end date and start date of the benefits.
Proof of income for a mortgage if you are self-employed?
If you are self-employed then the proof of income you may require will be a bit different from the standard borrower based on how you are self-employed.
without a LTD company
If you are self-employed but don’t work through a limited company then the documents you may be required to provide as proof of income for a mortgage include:
You will need to provide a HMRC letter headed confirmation of your SA302 tax calculation. You can get this by contacting HMRC.
An accountants reference.
You will also need to provide your bank statements showing the income stated on your SA302 tax calculation form.
If you are a contractor then the mortgage lender may want to see evidence of your contract as proof of income for a mortgage.
with a limited company
If you have a limited company which you work through then the documents you may be required to provide as proof of income for a mortgage include:
Aside from the above documents, you will need to provide company accounts as proof of income for your mortgage. Some mortgage lenders may request 1 years worth of company accounts whilst others may request as much as 3 years.
How can I get a mortgage without proof of income?
You may be able to get a mortgage with no proof of income but this will likely not be in the UK but rather in mainland Europe where self-cert mortgages are still available. You may be able to get limited advice from a UK mortgage broker on getting a mortgage without any proof of income but beware that self-cert mortgages do have a lot of disadvantages and you are more likely to lose your home]() when you have a self-cert mortgage.
Self-cert mortgages are also not regulated by the FCA which means you may have no recourse if things go wrong and nowhere to claim compensation from.
How do I get proof of income?
To get proof of income you must first ask the mortgage lender or mortgage broker what type of proof of income they want then contact the different organisations such as HMRRC, your bank and your employers who may be able to provide the documents you need as proof of income for your mortgage.
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.