What Documents Do I Need to Prove My Income for a Mortgage?

Getting a mortgage requires proving you have a steady income to comfortably repay the loan. The documents you’ll need depend on your employment situation. Here’s a breakdown to help you prepare:

Employed (PAYE Income Tax)

• Last 3 Consecutive Payslips: These will show your most recent monthly salary and deductions, allowing lenders to assess your affordability.

Self-Employed (Self-Assessment Income Tax)

• SA302s with Tax Year Overviews: These documents, obtained from HMRC (Her Majesty’s Revenue and Customs), summarize your self-declared income for each tax year. Lenders will use these to assess your average annual earnings.
• Limited Company Accounts (if applicable): If you operate as a limited company, you’ll also need to provide your company’s accounts. These financial statements detail your business’s income and expenses.

Years Needed:

• The number of years of income proof required typically ranges from 1-3 years. This depends on how long you’ve been self-employed or how long your business has been trading.

Age of Documents:

• Lenders typically prefer documents to be no older than 12-18 months. In some cases, documents up to 21 months old may be considered, but this is less common.
• This isn’t exhaustive, and lenders can accommodate workarounds such as employers references or accountants references where your documents don’t fit in a ‘neat box’ for some reason.

Contractors

• CIS Contractors: If you’re a contractor working under the Construction Industry Scheme (CIS), you’ll need to provide 3-24 months’ worth of CIS slips, depending on the lender’s requirements. These slips detail your construction industry earnings.
• Daily Rate and Fixed Term Contractors: Provide a copy of your most recent contract. This helps lenders understand the terms of your employment and income stability.

Mixed Employment Statuses

• Combination of Employment Types: If your income comes from a combination of employment categories (e.g., limited company director and daily rate contractor), you’ll need to provide proof of income for both.
• Favourable Income Consideration: Some lenders may consider the most favourable income source (the one with the highest earnings) to help you qualify for a higher borrowing amount.

Retired

• Most Recent Pension P60: Similar to a payslip for employed individuals, a P60 for pensioners details your annual private pension income.
• Most Recent Annual State Pension Award Letter: This document confirms your entitlement to the government’s state pension and outlines the amount you receive.

Benefits

• Most Recent Award Letter: If you receive government benefits, provide your most recent award letter. This helps lenders understand the nature and amount of your benefit income.

Remember:

• Gather all documents well in advance of applying for a mortgage to avoid delays.

By being prepared with the necessary income documentation, you can streamline the mortgage application process and move towards achieving your homeownership goals.