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When applying for a mortgage a lender will always want
to check your credit history.
A credit check will be
conducted to review your personal financial background,
and a report will be produced indicating your “credit
worthiness”.
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The credit
report will indicate whether you’ve missed credit card
or mortgage repayments, details of overdrafts and
whether you have any outstanding County Court Judgements
(CCJs). The credit report will also determine whether
you are currently on the electoral register for your
current address.
The mortgage lender will typically use the credit report
to produce a credit score, the higher the score the more
likely it will be that you’ll be offered the mortgage.
Two major companies specialising in producing Credit
reports are Equifax and Experian. You may approach these
companies yourself if you want to review your own
history. A typical
credit check report will cost around
£15, our
sample
credit report will show you what's normally
included.
A mortgage
lender will need to verify your income as part of the
mortgage application process. If you’re employed this
may mean the lender requires an employer reference. The
employer reference will typically consist of a letter
from your employer stating details your income, position
contract details and period of employment. If the lender
writes to your employer it is prudent that you inform
the relevant person or department within the
organisation and stress the importance of responding
without delay! A delayed response from your employer
could result in a delayed mortgage offer.
Lenders will typically class your status as a self
employed if you are a sole trader, a partner or own more
than 20%-25% of the shares of the company you work for.
If you’re self employed most mortgage lenders will
typically need to see your accounts and recent bank
statements. Lenders will need to see documentation
confirming how long you have you been self-employed
(typically for a minimum period which may be 6, 12 or 24
months) and paperwork proving your income (typically 2
or 3 years accounts)
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