What paperwork do I need when I borrow?
Paperwork is an essential part of any lending arrangement, there will always be paperwork required by the lender as part of their initial assessment and again prior to drawdown.
These days ‘paperwork’ includes electronic information, however, it still needs to be made available and be up to date.
To give you a guide as to what is required, and to ensure you don’t spend time collating unnecessary documents;
You are likely to need to provide;
- 6 months bank statements (showing rentals being received)
- Copies of AST agreements
- List of all properties owned and mortgages outstanding (this spreadsheet is ideal)
- Your last SA302 tax return (to include the tax computation and HMRC summary page)
- Last filed accounts if borrowing in a limited company name
Lenders may ask for other information depending on amounts, structure etc. The above is a good guide to what most lenders want to see. The information required has changed since the new buy to let criteria was introduced.
You are likely to need to provide
- Last filed accounts (full set not abbreviated or micro accounts)
- Any year to date P&L and Balance Sheet
- 6 months bank statements
It is worth getting paperwork prepared as lenders are increasingly asking for electronic information, with this in mind it is worth;
- Ensuring your bookkeeping is reconciled and up to date, lenders can ask for read-only access to cloud bookkeeping systems rather than ask for your year to date financials. Ensure your books are reconciled and up to date
- VAT & HMRC. Similar to the above, lenders can ask for read-only access to HMRC as this shows how up to date your tax position is and your VAT numbers are used to verify the year to date figures. Ensure you can log on to HMRC, especially if your accountant files for you (details here)
The misconception about raising finance for your business is that a business plan is required. More often than not a full business plan is not required. Given the time it can take to produce it is worth holding off unless it is asked for. Be aware that the term ‘business plan’ means very different things to different lenders if you are asked for a business plan then check what is being asked for.
There is always a level of generic information required;
- Photo ID for each business owner, borrower or shareholder holding over 20%
- Address confirmation for the above, typically a utility bill dated within the last two months
If any borrower is not on the voters roll (you can check here if not sure) then it is worth collating proof of address dated in each of the last three years.