Whether you’re hoping to secure your first mortgage or need a refresher before applying for a remortgage, here are the mortgage rules that you should know about in advance.
Rule 1: You need this documentation to apply for a mortgage
I.D.
When applying for a mortgage, you will need to be able to confirm your name and address through supplying proof of identification. The I.D. you choose must be the original document and valid. These can include:
- Passport
- Driving license
- Bank statements
- Utility or council tax bills
Proof of deposit
Your lender will want to see that you have the correct deposit and where this came from. It may be that you’ve saved the deposit yourself, that you’ve been gifted it, or a combination of the two. A selection of bank statements showing your savings over time can be used for this. If your deposit has been fully or partially gifted, you may need a signed letter from the person/people who gave you the money.
Proof of income
Proof of income is something else that your lender will want to see as this will inform them of whether you’re able to meet your monthly mortgage payments. If you’re employed, this will usually include your last 3 pay slips and your last 3 bank statements – plus your latest P60. If you’re self-employed, you’ll typically be asked for your last two or three SA302s or signed accounts, however this varies with each lender.
Rule 2: You need to be over 18 to apply for a mortgage
Like most loans, you will need to be over 18 in order to apply for a mortgage. Getting onto the property ladder at a young age is an amazing achievement and there’s plenty of research you can do before you turn 18 to ensure that you know exactly what to expect and have everything you need to apply when the time comes.
There are no legal limits when it comes to the maximum age that you can take out a mortgage. However, most lenders will have an age cap in place, typically between 65 and 80 years. This is because they must take into account that when you hit retirement age you may no longer have a fixed income should you stop working, and it’s likely that your income will decrease – even if you have a pension.
Rule 3: There are minimum and maximum mortgage terms
The mortgage term is how long you take your mortgage out for. The minimum mortgage term is five years and the maximum is typically 40 years, although some specialist lenders might be able to offer a longer term. The average mortgage term in the UK is 25 years, but you may wish to borrow over a longer term to make your monthly payments smaller. Keep in mind that the longer your mortgage lifespan is the more interest you’ll pay, so it could ending up costing more in the long run.
Rule 4: You must maintain regular mortgage payments
Once your monthly mortgage costs have been fixed, it’s integral that these are paid when required. Failure to do so could result in action being taken to repossess and sell your home, which is why it’s so important that you are honest when answering questions about your income and outgoings. You can also partially or completely pay off your mortgage should you find yourself in the position to do so. This could help to lower your monthly payments or mean that you can stop paying them.
If you find that you’re struggling to make the payments during your mortgage term you should alert your mortgage company as soon as possible to discuss your circumstances. This is because they might be able to help you depending on your situation.
Now that you’re aware of the mortgage rules you should know about, you can start looking for a mortgage that suits your needs. At Choice Mortgage Solutions, our team are available should you require assistance and advice to ensure that you find the best deal for you. Contact us today and we’ll be happy to help.