Our latest podcast talks about the various stages of a mortgage application. Read on for a summary of the discussion.
What is the first step in a mortgage application?
The best place to get started with a mortgage is with pre-approval, which is called a Decision in Principle. This is where the lender does some basic credit checks and confirms whether they will potentially take you on as a customer.
At the Mortgage Co, in order to get to pre-approval stage, we start with a complete ‘fact find’ to find out what your income is, your expenditure, and therefore how much you are likely to be able to borrow.
Where do you go to apply for a mortgage?
There are a few options. You could go direct to a bank or building society, or through a Mortgage Broker. The benefit of a Mortgage Broker over a bank or building society is that your own bank is only able to offer you their products – so it’s harder to know if you’re getting good rates.
As a Mortgage Broker, we can look at all the different banks and building societies, comparing rates and fees to find the most appropriate deal for you.
How do you prepare for a mortgage application?
A broker will also help you make sure you have all the paperwork you’ll need. For example, you’ll need the last three months’ payslips and bank statements. You will also need ID in the form of a driving licence or passport.
For the Self-Employed, it’s a little different. You will probably need two or three years’ accounts and bank statements. It can be different for every lender, though, and your Mortgage Adviser will talk through what’s needed.
What are the key stages in a mortgage application?
The main stages of your mortgage are:
- Finding out how much you can borrow, and gaining a Mortgage decision in Principle. This information will help you start looking for a home.
- Finding a suitable property and making an offer
- Exploring mortgage options and choosing the best one
- Applying for the mortgage
- Getting the application accepted
- Instructing and obtaining surveys and checks
- Completion
What is the best way of getting an offer accepted?
In recent months there have been a shortage of properties and a lot of buyers. This has meant that estate agents are asking for Best and Final Offers – where each buyer confirms their maximum bid for the property.
What we say to clients is, “Forget about what anybody else thinks, just work out what the property is worth to you.” It also helps to show confirmation of your deposit and Decision in Principle to the Estate Agent, to prove that you are a serious and credible buyer.
What happens once the mortgage application is submitted?
Every mortgage is slightly different. We can get some mortgage applications approved in a matter of two or three days, while some take a week or more. If you have a good deposit, you might get an automated valuation which means faster approval, as a valuer need not visit the property.
It can take a little longer if you’re self-employed, but if you have all your documents ready that can also be fairly fast.
How many applications are approved?
In our experience, most applications are approved. We have only had one client be declined in the last 9 to 10 months.
This is mainly because we are experienced brokers – we will seek out the right lender to suit a certain client, where they will have an excellent chance of being approved. Seeking mortgage approval without a Mortgage Adviser can be a little more hit and miss.
Why would a mortgage application be declined?
The most common reason for a decline is poor credit history. But poor credit doesn’t mean you can’t get a mortgage – you just need to highlight any credit problems at the start of the process. By checking your credit score upfront we can find a suitable mortgage provider.
What happens after the mortgage offer?
Once the mortgage offer has been issued, there will be a valuation to check that the property is worth the asking price. The Mortgage Lender will check all your details including your income and affordability.
Once approved, it’s over to the solicitors to complete the various legal processes involved in buying a property. With a broker involved, you can expect us to chase up all the details on your behalf.
For every client, we’ll be with you at every step. Want to discuss the results of your survey on the property? We’ll go through the details and the implications with you. We have years of experience in every kind of house purchase – so we can take the stress out of buying a home.
