Document Checklist

You need these as part of your mortgage application. Your solicitor will usually want to see them as well to evidence proof of funds.

Screenshots and spreadsheets are not acceptable. The statements need to be either original paper copies (you can ask your bank to print them) or PDF statements from online banking. They must show your name, address, and full account details.

Your broker has to go through your statements line by line as part of their expenditure analysis. Lenders will often scrutinise them too. It’s therefore really important that you do everything possible to make things transparent. Your advisor may request clarification from you on some transactions.

You must provide statements for every account you have, typically for the last three-to-six months. Therefore, if you transfer money to and from various accounts, make sure you’ve followed the steps below for all accounts you hold.

As above, check that your name and address is correct

Make it as easy as possible for the bank to verify that the statements are yours by having your current name and address on them. It’s relatively straightforward to update your address via online banking.

Avoid putting ‘funny’ references on transactions

Sending money to your mate and calling it ‘drug money’ might be hilarious at the time, but an underwriter isn’t likely to see the funny side. There have even been news stories about applications that have been declined because of this.

The odd bet here and there is fine

Gambling is contentious, but the general rule is that as long as it isn’t constant, and you aren’t overdrawn, the odd bet here and there should be fine. The lender needs to feel confident that your gambling isn’t impacting your ability to pay regular bills. Spending a lot might be considered a commitment, which will reduce the amount you can borrow.

Being in your overdraft isn’t ideal

But it isn’t usually the end of the world either. Lenders will not approve a loan if you constantly spend more than you earn. They might look more favourably on your application if they see that you’re working towards paying off your arranged overdraft.

Proof of income – employed

Lenders need evidence of your income before granting you a mortgage. If you’re employed, this will be in the form of payslips. The last three months’ payslips are usually required. Please note, if you are employed by your own limited company and you own more than 20-25% of that company, you will be treated as self-employed instead.

Lenders will struggle accepting handwritten payslips, so see if your employer can switch to computerised ones instead.

Both your name and the company name needs to be visible. This is so the bank can confirm it’s yours and that you work for who you say you work for.

It has to be dated. The date on the payslip should match the date the money gets paid to you.

If your address is showing, is it your current address? Even if you get your payslips online, look at updating this. Consistency is key.

Tax and National Insurance contributions need to be seen, along with your tax code. Everybody has a tax code. HMRC gives this to your employer. They use it to work out how much tax and National Insurance you have to pay. This is checked against your payslip deductions. If you’re paying back a student loan or paying into a company pension, you can expect to see these listed on your payslip too. Some lenders factor these into affordability checks.

If your basic pay varies each month, lenders might want to see a copy of your employment contract. This confirms how many hours you are contractually obliged to do. If the terms of your employment have changed since you signed it, for example you’ve had a payrise or your hours have increased, get a letter (on headed paper) from your employer confirming the terms.

If you receive a lot of variable pay, i.e. overtime or commission, provide your last two P60s. Lenders want to make sure you are receiving it consistently. Let your broker know if your basic guaranteed salary has increased between the date on the first P60 and now so the lender can factor that in when doing their calculations.

Proof of income – self-employed

Lenders need evidence of your income before granting you a mortgage. If you’re self-employed, this will be via your tax calculation and corresponding tax year overview. If you are a limited company director, a handful of lenders will also consider using your salary and profit in your company accounts, rather than dividends you have personally drawn.

The figure lenders work off is after expenses have been deducted but before tax is paid. They do not work off your turnover, which is all the money you earned in the year. They go off the figure you pay tax on. There can be a temptation for self-employed people to declare as little as possible to reduce tax liability but this will scupper you when it comes to mortgage affordability.

Some lenders will work with just one full year’s trading figures, but most need at least two. This is to check that your business is profitable and sustainable. Lenders work off the tax year, 6th April to 5th April the following year – so if you went self-employed in June 2022, you would have to wait until April 2024 before you would have a full year’s trading figures.

The majority of lenders also take an average of your last two years’ figures, or use the latest year’s figures if they are lower than the year before. This is done to get a more balanced picture of your income, as it isn’t guaranteed in the same way an employee’s salary is.

Both the tax calculation and corresponding tax year overview are required. Check that the figures match on both documents. If they don’t, they won’t be accepted.

You may have to provide bank statements for your business. Lenders want to verify that the income you are declaring is sustainable. They do this by looking at your business bank statements and seeing whether the turnover is going to allow you to keep earning a similar amount.

Credit report

Whenever you borrow money from a company – be it a loan, a credit card, or even a mobile phone contract – they report on your account conduct each month. Did you pay them back in full or on time, or were you late? Have you stopped paying them back entirely?

These reports are sent to the credit referencing agencies. The three main ones in the UK are Equifax, Experian, and TransUnion.

If you apply for any form of credit, the creditor will run a check against your name as part of their decision-making process. They can use one credit referencing agency or a combination of them.

It’s important to check your credit report on a regular basis so you can make sure things are being reported properly. If it isn’t, you can raise a query and look to get it amended.

In the first instance we recommend using Check My File. This is because it pulls data from Equifax, Experian, and TransUnion, and shows it all in one place. If you haven’t used it before, it’s free for the first 30 days then £14.99 a month thereafter, but you can cancel the subscription at any time (including during the 30-day free trial period).

What about a credit score?

You are given a score, usually out of 999. The higher the score, the better your account conduct has been. There are various factors that drive the score:

• Payment history – this is the main one. Have you been paying back the money you owe? Lenders like seeing some history that shows you’re dependable.
• Account utilisation – how much do you owe? Some banks have a debt to income ratio, which looks at how much you owe relative to what you earn in a year. Are you close to your credit limit? This could indicate that you’re struggling financially and need to borrow money to keep afloat.
• New credit – opening a lot of new credit accounts in a short space of time, or enquiring about doing so, can impact your score.

Your advisor won’t be as interested in the score as they are with the reason for it.

Adverse credit

If you have missed payments, defaults, or county court judgments (CCJs), you may still be able to get a mortgage.

The older adverse events are, the better. Things drop off your credit file six years after the date they happened.

A higher interest rate or a bigger deposit may be required. Your advisor should be able to tell you how long you need to wait before you can reapply for a mortgage if you can’t currently get one because of your credit.