To help make the house buying process run smoothly, one of the biggest things you can do is make sure you have your money prepared. This includes having proof that things are how you say they are.
Here’s a quick run-down of everything you’ll need.
Proof of deposit
You’ll need your deposit saved and statement print-outs to prove it exists when applying for a mortgage. If it’s split across multiple accounts, you might want to move it into one before getting a statement. Of course, if you’re using a Help to Buy ISA or a Lifetime ISA this may not be possible.
Proof of income
Part of a mortgage lender’s affordability check is looking at your income, as this helps them assess whether or not you’ll be able to afford mortgage repayments. To allow them to do this, you will need to supply 3 months’ worth of payslips. If you’re buying a home with someone else and it will be registered in both your names, they’ll want to see proof of income for both of you.
Another part of a lender’s affordability check is reviewing your incomings and outgoings using bank statements. You will usually be asked to produce 3 to 6 months’ worth of bank statements. Lenders will be looking for any unusual spending habits, as well as general patterns of expenditure.
If you intend to buy a home in the future, it’s worth using the months prior to applying for a mortgage to demonstrate responsible spending behaviour. That way, when a lender reviews your bank statements, they shouldn’t see anything untoward.
Mortgage lenders will want to see what other savings you have to help them understand how financially resilient you are. Having some money put aside means that if something bad happens, such as the boiler braking, you’ll have the money to cover it without falling into debt. Lenders also like to know what other savings you have so they can see whether or not you could afford to put down a bigger deposit if required.
If you save in any of the accounts mentioned already above, you won’t need to provide any additional proof. However, if there are other accounts or stocks and shares where you have money, you will need to submit statements.
It’s worth noting that having savings outside of your home deposit is a good idea to help you cover the cost of things like conveyancers, estate agents, surveyors, stamp duty, moving day and any furniture/appliances you might need.
Preparing your deposit for completing on your home
Your conveyancer will arrange to transfer your deposit to the vendor when you exchange contracts. This is a really important part of the process, as not only does it mean that the house you want is finally yours, but if the money isn’t transferred at the right time, you could be liable for costs or even lose your new home.
To get everything ready, you need transfer your deposit into one account, which the conveyancer will have access to. If you’re eligible for the Help to Buy or Lifetime ISA bonus as part of the ISA, your conveyancer will need to apply for it in advance of exchanging. In order for them to do this, you will need to close your account.