Here are the key steps in the mortgage application process.
Do you have your heart set on buying a home? You likely want the procedure to go as quickly as possible. However, getting a mortgage involves a lengthy waiting period. We’ll provide you with a practical guide to what to expect by explaining the timeline for the mortgage application process.
The main steps in the mortgage application process are listed here.
How do you know when you are ready to start applying for a mortgage? Help is available; we’re ready. This article will walk you through every step of the mortgage application procedure, from early preparation to obtaining the keys.
Speak with a mortgage broker
Establishing your budget before anything else is a smart approach. Your budget includes the money you must allocate for a down payment and the amount you must borrow (your Mortgage). These will allow you to determine the housing price you can afford.
How much you’re able to borrow? This is determined by your income. Most lenders won’t give you a loan for more than 4.5 times your annual income. Therefore, if your income is £70,000, a lender may allow you to borrow up to £315,000.
It is advisable to obtain advice from an authorised mortgage advisor. There are several explanations for this. First, working with an independent mortgage broker is the simplest way to get a mortgage agreement. The mortgage broker can help you understand the lender interest rate most suits you. They can search the whole market for the most suitable lender for you. Also, they’ll sort out the application! If you need help finding the right broker, use our here.
We are confident in the quality and guarantee of our services to get your application approved. We realise how important it is for customers to feel confident in our service.
Assessment and Affordability Checks
When applying for a mortgage, several documents are necessary, and it’s a good idea to gather relevant information and have it ready to minimise delays in the process. Mortgage brokers will require the following from you to make an affordability assessment:
- Proof of identity (ID, Passport)
- Proof of address (driving license, bill)
- Bank statements (to see outgoings, suck commitments, credit card payments)
- Proof of employment (employed or self-employed)
- Proof of deposit (personal bank statements, savings)
- Credit history (Checkmyfile, Experian, Equifax)
Get a decision in principle:
Getting a mortgage in principle, or agreement in principle (AIP), is a sparkly certificate from brokers that indicates the maximum amount you could borrow. Your income, including at least three months of payslips, your most recent P60 (if you are self-employed, you must provide your most recent tax return and accounts), the amount of your deposit and up to six months of bank statements, your credit score, and your outgoings are all considered.
Obtaining an agreement in principle once your lending potential has been assessed, you will be provided with a decision in principle or a mortgage in principle document.
One potential barrier to getting a mortgage can be your credit history, particularly if you have a history of missed payments, defaults or insolvency. These are the most typical reasons for mortgage applications being rejected.
This document doesn’t mean that you have been granted a mortgage. Still, it is a statement confirming that a lender is willing to lend to you based on your credit score or credit history; it’s a good start. To demonstrate that you’re a serious buyer, you may bring it with you when visiting properties.
Find a property and make an offer.
Once you get your Mortgage in principle, you are ready for house hunting. In other words, it’s time to discover and make an offer on your new home.
Because each individual and each house search are unique, it is challenging to estimate a time frame. After all, some individuals fall in love with the first house they visit. In contrast, others see hundreds before discovering the ideal one. So it’s all about getting that feeling!
It’s a good idea to start watching websites like Rightmove and Zoopla before this. Hence, you know exactly what you’re looking for and are prepared to act when the right property arises.
Once you’ve found a suitable property, you’ll need to make a formal offer. Again, your real estate agents should help you do this, as sellers and properties require various offers.
Prepare documents for your mortgage application process.
Your mortgage broker should submit a formal mortgage application once you find a property and your offer on a property is accepted. It will be necessary for you to present proof of your identification, earnings, and your current financial situation.
Get to a solicitor or conveyancer.
You need a solicitor or conveyancer to handle the legal part of the process before you apply for a mortgage. Some steps include creating the contracts and performing legal search and property inspections to ensure you are satisfied with the survey, the mortgage terms, the completion date and the contract details. You can check out here to learn more about the solicitor process.
Apply for a mortgage
Your mortgage broker will use his knowledge to research the market for your situation and recommend the type of Mortgage that could suit your demands and circumstances. Before applying for a mortgage, they need to consist of the following:
Type of mortgage:
- Capital and interest repayment mortgage
- Interest only mortgage
- Part and Part Mortgage
Mortgage product
- Fixed Rate Mortgages
- Tracker Rate Mortgages
- Offset mortgages
- Discounted Rate Mortgages
- Variable Rate Mortgage
You must also consider fees and costs when arranging a mortgage deal.
- Fees and charges (pre and post-completion)
- Portability
- Your ability to pay
It’s time to submit your mortgage application! A “hard” credit check will be performed, and you will need to assemble your supporting documentation. You will also need to respond to some lender questions. Before making a final decision, your lender will review your financial situation carefully. If everything goes as planned, you’ll receive your mortgage offer.
Mortgage Application Process – mortgage valuation.
The mortgage valuation is when your mortgage lender checks whether your home has value for money. This procedure is termed a ‘value assessment survey’.
Sometimes the lender will bring someone to the property you are buying to conduct the survey personally, or they might ask someone to take a drive-through to see the property from outside, performing an online valuation using computer hardware.
Suppose everything is in order, and there are no issues in the valuation and application process. In that case, the lender will provide you with a formal mortgage offer. Mortgage offers are usually valid for six months.
Mortgage Application Process – Mortgage Protection
Your Mortgage is your most significant monthly expense. Even if you could not work because of an illness or loss of employment, you would be responsible for making your payments or risk losing your property.
If you become sick or pass away before paying off your Mortgage, having a protection insurance policy might provide you peace of mind knowing that your loved ones won’t be out of money.
When taking out a mortgage, you should take into consideration the following four types of insurance:
- Buildings insurance: To pay for the costs of rebuilding your property in the event of a disaster.
- Life: If you pass away before your Mortgage is paid off, it will cover the costs.
- Critical illness: To assist in paying off your mortgage costs if you are diagnosed with a critical illness.
- Income protection: To assist with covering your monthly mortgage payments if you cannot work due to an injury or illness.
Although it is not required by law to get life insurance when you get a mortgage, most Mortgage lenders require building insurance before the contracts are signed.
Exchange and completion
Once your solicitor has received the mortgage offer, they will start working on determining when the contracts will be exchanged. Before exchanging contracts, you typically need to pay the deposit, and the solicitors or conveyancers will write the property transaction. They will also specify the day for exchange contracts, and the property will be transferred from the seller to the buyer.
