How does the mortgage application process work?
Below we have put together a mortgage application process timeline. This is to help you prepare for your application, ensuring your journey is as smooth as possible and that you maximise your chances of success.
Step 1: Make Contact
The entire mortgage process begins with the initial point of contact. This can sometimes be the most frightening of all the steps.
For many, this is uncharted ground and figuring out where to begin might be difficult. If you’re applying yourself, you will need to directly contact your chosen lender. However, if you’ve decided to use a broker then you’ll need to contact them.
You’ve already made the first step by reading this, so why not contact one of our helpful advisors? From here, we can set up a free no-obligation consultation to discuss your needs and get you started on your mortgage journey.
Step 2: Pre-qualification
You’ve taken the first step and contacted a broker, which is fantastic. So, what comes next?
One of our expert consultants will examine your case in detail, allowing them to understand your needs. From here they will advise you on any extra information / documentation needed to do a complete market search.
We’ll do a fact-finding exercise with you and talk about particular areas of your situation, such as:
This will allow the consultant to determine your budget and potential affordability for your required mortgage amount. It will also give them an idea of what monthly payments you could afford.
Your advisor will outline how this may impact which lenders are accessible to you, as well as what may be available to you. The larger the deposit or equity in your current home, the more options you open up, which can increase your chances of being offered a competitive mortgage product.
By determining your credit history, the consultant will be able to determine your chances of success. This also helps them narrow down which lenders may be available to you. Having a good credit history can significantly affect what you’re offered and your chances of success.
We’ll need to know what you want to do, such as whether you want to buy a new home, remortgage, or if you’re a first-time buyer or interested in Buy-to-Let.
Fill out our quick and easy Mortgage Affordability calculator below. We only require a few details to see how much you may be able to borrow.
NO CREDIT CHECKS!
Step 3: Suggestions
Once your advisor has analysed your situation and browsed the market, they will give you advice based on their findings. This will contain information on elements such as rates, as well as any associated fees that may apply. Everything you need to know should be covered at this point.
If you’re unable to proceed immediately – for example, because you’ve not yet discovered a home to buy – the actual mortgage arrangements and lenders will be addressed in more general terms.
This is because the market changes, and whatever mortgage lender and scheme is appropriate for you may change in the meantime. From this point you will have a solid understanding of what to expect when the time arrives.
If you wish to proceed immediately you can look to get an agreement in principle (AIP), which is covered in the next step.
Step 4: Agreement in Principle
Your advisor can help you obtain an Agreement in Principle (AIP). This is also known as a Decision in Principle or Mortgage in Principle and is the first step to getting a mortgage. It’s a simple way of finding out how much money your lender will allow you to borrow without actually applying for a mortgage.
AIP are great ways to get an idea and confirm what type of property you can afford. Further to this, many estate agents require proof of an AIP in order to show you a property, so they know you are committed to buying a property.
An Agreement in Principle is obligation-free, meaning you’re not tied to a particular type of mortgage deal or lender. However, it’s worth noting that your AIP does not guarantee a lender will approve your application or lend you the amount specified, as things can change during the application.
Step 5: Applying for a mortgage
When you’re ready, if you have used a broker, your designated advisor will prepare to send your mortgage application to your preferred lender. If you are applying on your own, you will need to directly contact your lender. This is typically done online, via a video call or by phone.
At this point, the mortgage provider will review any supporting paperwork that has been requested. Your advisor will inform you of the documents that the lender will demand, so that you may prepare them in advance.
Typically, the lender will supply your advisor with a “shopping list” of the preliminary papers required. Following a thorough review of the documents already submitted, your lender may also require more documents in specific instances.
Step 6: Make a mortgage offer
The official mortgage offer will be given whenever the lender is satisfied that the property provides adequate security and when they’re pleased with the paperwork given.
This certifies their readiness to lend and outlines the terms and circumstances of the mortgage requested. A copy will be emailed to you and your mortgage advisor, as well as one directly to your acting solicitor.
Once the offer is given, the lender will confirm in writing that they are willing to supply the mortgage. This is subject to the solicitor’s confirmation that all legal concerns are suitable. An offer will normally last between 3 to 6 months although it may take longer on occasion, such as when a new construction product is chosen.
Step 7: Make an offer / pre-completion
Now that your mortgage has been officially approved and if you wish to accept the offer, your advisor will examine your potential insurance needs. They can then make suggestions and arrangements on your behalf. Some types of insurance to consider at this stage are:
For any freehold property, you will almost certainly be responsible for the property insurance. The issue with leasehold is different, and your solicitor will investigate this on your behalf. Your mortgage provider will make it a condition of the loan that you have appropriate cover in place for the duration of the loan.
Contents insurance protects your valuables within your house and is generally purchased in conjunction with property insurance. It is sometimes known as buildings and contents insurance.
This is a type of insurance policy, provides a lump sum payment in the event the policyholder passes away. This type of policy is often more expensive than life insurance, as it has higher premiums due to the fact it offers a guaranteed payout.
Income protection insurance is meant to pay you a certain sum on a monthly basis if you are unable to work, or in some cases in the event of redundancy. These policies are designed to cover essential living costs, like your monthly mortgage payments.
Step 8: Finish
When your solicitor has completed all essential legal procedures, and all parties are prepared, you may seek to schedule a completion date.
After that, the solicitor will make the required preparations to request the loan money. Typically, a lender requires 5 working days between the request for cash and the day of delivery. However, this might be lowered in specific cases.
If you’re remortgaging, completion will be the day your loan is transferred from your present lender to the new one. To put it simply, your former loan is repaid by your new lender, and the new loan begins. Any additional funds you raise will now be given to you. If you are buying the home, completion will signal that you are now the legal owner of the property.
The transfer of money can happen at any point during the day. Once money has been transferred to the existing owner, your solicitor will notify you and you’ll be given the keys.
Step 9: Following completion
As part of our offer, we provide a personal mortgage review service. This means that as you approach the end of your agreement, one of our advisors will contact you to ensure your mortgage is appropriately set up. Then, if needed, you can look to remortgage to a more favourable deal.
Our expert advisors will be able to support you throughout every stage of your mortgage application. Why not contact us today to speak with one of our advisors during a free no-obligation consultation?
Frequently asked questions
Everyone’s situation is different, so you may not always be required to provide the same documents as someone else. In our experience, the most common things lenders ask for include:
- ID – driver’s licence or passport.
- Proof of address – usually a utility or council tax bill dated within the past 3 months.
- Bank statements – recent bank statements to help show income and expenses.
- Proof of deposit – typically shown through your bank statements.
- Proof of income – recent payslips to demonstrate a consistent income source.
If you are self-employed you’ll likely need the following:
- SA302 – shows your tax year earnings, proving your income.
- Trading accounts – the last 2 to 3 years’ worth of accounts prepared by a chartered accountant.
From our experience it can take anywhere between just a few days to around 6 weeks to have a mortgage formally approved. This is from the time you submit your application to the day of issue of the mortgage offer.
Remember that the overall process can take much longer than this. You will need to shop around and find a suitable property, as well as take the initial steps to pair yourself with the most suitable lenders.
If you want to get an accurate idea of how long it may take you to get a mortgage, why not reach out today?
There are a number of reasons for why your mortgage application could be rejected by a lender. Some common reasons include you being seen as too risky due to things like bad credit or a small deposit, or it could be as simple as you accidently giving the wrong information on the application.
Firstly, you will need to identify why your application was rejected, then from here you can reassess and take steps to fix the issue.
For example, if the issue was that some information provided was incorrect or inaccurate, your best bet is to look over your application carefully and find out what caused the hiccup.
If instead you were seen as too risky by a lender due to things like poor credit and/or a small deposit size, then you may need to rethink your application. You could take steps to improve your credit, although this can take a long time. Instead, it may be a good idea to use a ‘guarantor’ who will agree to make payments if you are unable to, providing additional security to your application.
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