What Questions will a Mortgage Broker ask?

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In 2014 the Mortgage Market Review was implemented. This was a wide scale examination of mortgage rules in the UK, and was designed to reduce the risk of another financial crisis.

As a result you will have to answer quite a few questions when applying for a mortgage, whether you use a mortgage broker or go it alone. These questions are designed to find out if a mortgage is the right thing for you and, if so, to make sure you get one you can afford to repay.

Some lenders also require borrowers to demonstrate they could afford to make repayments if interest rates were to increase. These "stress tests" are designed to protect you as well as the lender, by ensuring everyone involved can afford to lend or borrow the money in question.

Here are some of the topics you'll have to answer questions on. You can expect the interview to take up to two hours: a slog, but a worthwhile on.

Your earnings. You will need to provide proof of this: pay slips, P45s, and so on. If you're self employed you may also need to provide proof you will have income in the future, which can be tricky.

Expect questions like:

  • Do you plan to stay in your job?
  • Do you plan to become self employed?
  • Do you expect your income to change in the next two years?

Your spending habits. This includes day-to-day expenses as well as deeper questions about your ability to manage your money. When assessing debt, brokers look more closely at your monthly repayment amount than the overall amount you owe. Reliance on overdraft and loans may paint a picture of a borrower who is likely to struggle with repayments in the future, which could harm your ability to borrow a lot or even at all.

Expect questions like:

  • Do you gamble?
  • Are you often in your overdraft?
  • Have you ever used a payday loan?
  • How much do you spend on necessities like groceries / bills / commuting / clothing / grooming / health care / childcare?
  • How much do you spend on optional extras like gym memberships / media subscriptions / leisure travel / shopping / pets?
  • How much do you spend on vices like alcohol / cigarettes?

Your plans. The broker will look to understand whether you are planning any expensive holidays, whether you are looking to have children, and various other indicators that your financial situation could change relatively drastically in the future.

Expect questions like:

  • Do you have children?
  • Are you planning to have children, or more children?
  • Are you planning any holidays around the application period?

These questions allow your broker to build up an accurate image of you, your life, and your financial situation. The answers help them to connect you with the best mortgage deal for you, and help you to avoid a situation where you cannot afford to make your mortgage repayments.

The questions may be gruelling, but they are a small price to pay for peace of mind.