Mortgage Underwriter Asking for More Documents? Here’s Why

Why Underwriters Need More Documents for Your Mortgage?

When you apply for a mortgage, you’ll submit various documents like payslips, bank statements, and IDs. 

But underwriters aren’t just checking these basics – they need the full picture of your finances.

Here’s what they’re looking for and why they might request more documents:

• Credit Check. They’ll scan your credit report for late payments, defaults, or other issues. Even if you explain to them, they might ask for extra documents to understand the situation and assess the risk of lending to you.
• Income Check. If your income varies or comes from multiple sources, they’ll want additional payslips or tax returns. This ensures your income is steady and enough to afford the mortgage repayments.
• Employment Gaps. Gaps in your work history need explaining. They might ask for documents showing why there were gaps and how you managed financially during that time.
• Unusual Bank Activity. Big deposits or withdrawals raise questions. They’ll want proof explaining these transactions to make sure they’re legitimate and don’t pose a risk to your ability to repay the loan.
• Financial Stability. They’re checking for any risks that could affect your ability to repay, like frequent gambling transactions. They might ask for explanations and proof that such habits won’t hinder your repayment capacity.
• Self-Employed. They’ll need extra documents like business accounts, tax returns, and future income projections. This helps them confirm your income is stable and likely to continue.

Why Couldn’t They Just Ask for Everything Upfront?

It might seem easier if underwriters just asked for all your documents upfront. 

But here’s the thing: they can’t predict every question that might pop up as they review your application.

Every mortgage application is unique, and new questions often arise as they delve deeper into your finances.

For example, let’s say your payslips show an unexpectedly high income one month. The underwriter will want to know if it’s a one-off bonus or a permanent raise, as this affects their assessment of your long-term affordability.

Similarly, if you have employment gaps or past financial difficulties, they’ll need extra documents to understand the situation and how you recovered.

So, underwriters can’t ask for everything upfront because they don’t know what extra details they’ll need until they see your initial documents. 

This thorough review protects both you and the lender by making sure the mortgage is a good financial decision for everyone.

How Can You Help Streamline the Process?

While it’s frustrating to receive multiple requests for documents, there are steps you can take to help streamline the process:

1. Be Responsive – Respond to the underwriter’s requests straightaway and get them the documents they need ASAP. Delays from you can really slow things down
2. Be Transparent – Don’t try to hide or downplay any financial issues or irregularities. The underwriter will find them out anyway, and being transparent from the start builds trust and avoids delays.
3. Provide Clear Explanations – If they ask for clarification on anything, provide detailed written explanations alongside the relevant documents. This helps them understand the situation and might avoid extra back-and-forth.
4. Use a Mortgage Broker – An experienced mortgage broker can be invaluable. They can anticipate the underwriter’s questions and ensure you have all the necessary documentation ready from the start, reducing delays.

What Happens If You Can’t Provide the Requested Documents?

If you can’t find some of the documents the underwriter asks for, like old bank statements or tax returns, don’t panic. Be honest with them and explain your situation.

There might be other documents you can provide as evidence. The important thing is to talk openly and show you’re willing to help. If the underwriter thinks you’re hiding something or not cooperating, it could hurt your chances of getting the mortgage.

Underwriters assess risk, so if they don’t have a clear picture of your finances, they might not approve your loan.

How Long Does the Underwriting Process Take?

The underwriting process can be frustratingly slow, but there’s a good reason for this. 

They need to be meticulous in their review to ensure they’ve covered all bases and properly assessed your ability to afford the mortgage.

Typically, the underwriting stage can take anywhere from a few days to several weeks, depending on the complexity of your case and how promptly you provide the requested documentation.

If you’re working with a mortgage broker, they can often provide insights into the typical timelines for your specific lender and situation, helping you manage your expectations.

It’s important to be patient and understand that rushing the underwriter could lead to oversights or incomplete assessments, which could ultimately delay or even jeopardise your mortgage approval.

What If Your Mortgage Application Is Declined?

Even after providing everything, your mortgage might still be declined. But don’t give up!

The underwriter will explain why they rejected you, so you can improve and try again later. Here are some common reasons:

• Bad credit history or too much debt
• Not earning enough or unstable job
• Missing documents or they couldn’t check some details
• Problems valuing the property

The Bottom Line

If your application is declined, take some time to review the reasons and seek advice from your mortgage broker.  They can help you fix any issues and get you approved next time.

Remember, preparation is key to success.  If you’re quick to respond, upfront about your finances, and have everything organised, the whole thing will be much smoother and you’ll be more likely to get the mortgage. 

Your mortgage broker can be the right help throughout the process, offering advice and support.

For a free, no-obligation consultation with a good mortgage broker, get in touch with us.

Get Matched With Your Dream Mortgage Advisor...

Find out if you qualify today by taking the M-Quotient™ Assessment for FREE!

Find my dream advisor & mortgage

(Won’t impact credit score)