Guide to mortgage capacity reports
You might have come across the term mortgage capacity report when applying for a new mortgage or a remortgage. Many mortgage advisers and mortgage brokers will use a mortgage capacity report or fact find. These reports are used to assess your capacity for a loan.
In this guide we look at how a mortgage capacity report works and what it might include for many mortgage advisers.
There are many key responsibilities of mortgage advisers and mortgage brokers. One of the main ones is to make sure that they perform a proper mortgage assessment. Your application will be reviewed several times to protect you and your family against potential financial loss.
Mortgage capacity reports will provide evidence to regulators which helps to evidence your suitability for a mortgage loan.
What is a mortgage capacity report?
A mortgage capacity report is another term for a mortgage fact find or a mortgage suitability report. This is a detailed investigation with a set of questions and information you will need to provide. This is performed by your mortgage advisor or broker. The purpose of this is to assess suitability and affordability and the assessment is more reliable than a visit to your bank.
Your mortgage capacity report will usually be completed by your mortgage advisor at the very beginning of your mortgage application process.
This evidence will then be used by your mortgage advisor. It will help them to build their mortgage advice plan and loan assessment. You’ll usually be asked to answer a set of financial and credit questions which we explain below.
A mortgage capacity report provides you with:
- Affordability calculations to help you to understand what options are available to you and how those figures have been calculated
- Income assessments to provide evidence of your income calculations and any supporting information
- Credit history and credit risk which shows you what your credit score and assessment levels are
- Mortgage suitability will show a holistic picture of your overall income, expenditure, credit assessments and repayment profile
What information is included in my mortgage capacity report?
Each mortgage lender and mortgage advisor will collect a set of financial and credit assessment questions.
This information includes:
- Income (e.g. salary, bonus, dividend, rental incomes etc.)
- Outgoings (e.g. mortgage, rent, utilities, bills, travel expenses, school fees etc.)
- Residential status (3 years residential history)
- Employment history (12 months employment history)
- Credit (e.g. loans, credit cards, store cards and other debts)
- Credit score (e.g. missed payments, defaults, CCJ’s, IVA’s and bankruptcy)
- Assets (e.g. residential property, rental properties, holiday homes, investments etc.)
- Dependents (e.g. children under 18 and elderly parents)
- Other financial information (e.g. inheritances, retirement planning etc.)
Why do I need a mortgage capacity report?
You don’t need a mortgage capacity report for any specific reason but your mortgage advisor should complete their own research.
There are some other reasons where a mortgage capacity report might be useful, such as:
- Courts to help with financial judgements
- Financial planning (e.g. wealth managers and independent financial advisors)
- Post divorce or separation and your broker can be instructed on a joint basis if you both need separate reports (e.g. divorce settlement/financial settlement)
How to get a mortgage capacity report
There are several websites that offer mortgage capacity reports for you to complete online. These websites will provide you with a set of guidelines and data.
You can also speak to a qualified mortgage specialist to obtain your mortgage capacity report to assess your mortgage suitability. This report should be FREE and should then enable you to perform a realistic expectation around your mortgage suitability.