Many people find the prospect of applying for a mortgage to be daunting. But don’t worry: you’re not alone. It is a financial and organisational challenge. But with a little forward thinking and advance preparation the task can be broken down into a series of manageable steps and you can find the right mortgage for you.

How to apply for a mortgage - 11 steps

If you haven't applied for a mortgage before, the way forward can seem a little unclear. To demystify the process, here are some simple steps on applying for a mortgage.

1. Make sure your finances are in order.
2. Check your credit score.
3. Work out your budget.
4. Check how much you can borrow using online tools.
5. Gather all the documents you need.
6. Export and download any bank statements, utility bills etc that you need and make sure they are up to date.
7. Compare mortgages online, talk to your bank or arrange a chat with a mortgage advisor.
8. Decide on the mortgage you want with your preferred lender.
9. If you haven’t yet made an offer, ask them whether you can get a mortgage in principle.
10. If you’ve made an offer, call your lender and make a formal mortgage application.
11. Start your application. Follow the process set out by your lender and provide the documents, details and so forth that you’ve previously prepared.

Before you apply

What you should NOT do before applying for a mortgage

On the other hand, you’ll want to avoid doing things that will reduce your chances of obtaining a mortgage. Some things that could negatively impact your eligibility as a borrower include:

• Ignoring your credit score. A poor credit score will make it harder to get a mortgage. Be sure to do your own credit check with one of the three main UK rating agencies. The score they assign you is reflective of your creditworthiness.
• Apply for loans: Recent loan applications could suggest a higher debt-to-income ratio.
• Quit your job. Lenders typically value the amount of time you’ve spent at your current employment.
• Making large deposits or purchases. Your bank statements will be scrutinized closely for any signs of irregular activity. Out-of-the-ordinary deposits or withdrawals could raise a red flag.
• Forgetting to pay your bills on time. Missing regular bill payments harms your credit score, which in turn makes you a less appealing candidate for a mortgage. Be sure to keep up credit repayments.
• Closing credit accounts. This can reduce your available credit, raise your debt-to-income ratio and harm your ability to get a mortgage.

How to boost your chances of getting a mortgage

While there’s no way to guarantee you’ll gain approval for a mortgage, your best hope is to maintain a good credit score and remain in full-time employment. All lenders use different criteria to determine who they’re willing to lend to, but all of them will include a credit check. If you’ve never used credit, however, you should try to establish a credit history before applying for a mortgage.

To boost your chances of getting a mortgage you should:

• Begin to build a credit history. By ensuring you’re on the electoral register (especially if you’ve just moved somewhere new). You can register to vote here.
• Consider taking out a credit card. Use it regularly and pay off the balance in full every month. By taking these steps, you’ll demonstrate your ability to pay off debt regularly.
• Stay in your current job for a while. In terms of employment, you should aim to show stability by staying in your current job for a significant period before applying for the mortgage.

Read more about how to improve your credit score here.

Work out your budget

What can you afford? And how much are homes being sold for? Before applying for a mortgage, use our free House Prices tool to set a price range for your house search. It doesn’t need to be specific, but you should get a general idea of the property prices in your preferred areas.

Speak to a mortgage adviser and find a mortgage

A good early step is to find a mortgage adviser (sometimes referred to as a mortgage broker) who can advise you on which providers are most likely to consider your application. All mortgage advisers must either be regulated by the Financial Conduct Authority, or be an agent of a regulated firm.

The adviser will make suggestions about which type of mortgage is right for your needs. Advisers help buyers - especially first-time buyers - navigate the complicated mortgage process, so they’re an excellent resource about what to expect in terms of standard fees, extra charges and timelines. Mortgage advisers will also help you compare mortgages: Don’t settle for the first institution that offers you a loan because you could get a better offer.

How do lenders check if you can afford a mortgage?

Mortgage lenders have a thorough process for ensuring borrowers can actually afford the mortgage for which they’re applying:

1. They will begin with a credit check to determine whether you can be trusted to repay the loan.
2. Next, they will seek proof of your household income, including your salary (and your partner’s, if relevant), as well as any freelance work, bonuses, commissions or passive income.
3. Lenders also want to know whether you’ll have sufficient funds at the end of the month to make your mortgage repayments, so they’ll also consider regular household bills, loans, debt load and credit cards.
4. Additionally, lenders perform what’s known as a ‘stress test.’ Stress tests were instituted after the 2008-2009 financial crisis to determine whether a borrower could still afford their mortgage in the event interest rates rise. Stress tests also address other life events, such as whether the borrower retires, has a child or goes on parental leave.

All of these checks are designed to help lenders determine how much you could borrow and repay.

How long does it take to apply for a mortgage?

Applying for a mortgage may only take about 24 hours if you have all the documents ready, though a number of factors could delay it, especially if you’re juggling full-time work

Once an application is submitted, most borrowers can expect a mortgage decision within about four weeks. The process can take longer, however, depending on the specifics of the situation. If your mortgage application is successful, your conveyancer will arrange for the funds to be transferred from the lending institution to the sellers on the day of completion.

Read more on this topic: How to get the best mortgage rate

Applying for a mortgage

The pre-planning phase should include:

• Working out your budget
• Finding a mortgage broker to give advice
• Preparing the necessary documents

What you need to apply for a mortgage

Once your offer on a property is accepted, it’s time to formally apply for your mortgage. To do this, you’ll need to gather together a raft of documents. Typically, you’ll be asked to provide original materials, although occasionally printouts or pdfs are acceptable in the case of bank statements. The document you need may include:

• Between two and six months of pay slips, bank statements, your last P60 and/or your self-assessment returns (if relevant) to verify your earnings.
• Details of your regular expenditures, including childcare costs (if relevant), utility bills, Council Tax, insurance policies, travel and entertainment.
• Employer information.
• Proof of any benefits received.
• Proof of identity (can be a driving license or passport).
• Proof of current address eg: Utility bills, electric, gas, water etc.
• Proof of deposit.
• Your solicitor’s details.
• Your estate agent’s details.

You should also contact the three main credit agencies -- Equifax, Experian and TransUnion -- to check your score and ensure none of the reports contain erroneous information about you.

Consider getting a mortgage in principle

Potential borrowers sometimes find that an initial, preliminary decision on their mortgage application - known as ‘mortgage agreement in principle’ - can be more or less instantaneous. An agreement in principle is reliant on basic, self-reported income information and a quick credit check. It’s an indication of a lender’s willingness to lend to the borrower, but it’s only a preliminary decision.

A full mortgage is only delivered following satisfactory answers to more detailed questions about the borrower’s finances. Still, some buyers feel that obtaining a mortgage agreement in principle early helps accelerate the mortgage application once they’ve decided on the property they’ll purchase.

When should I apply for a mortgage?

People typically make a mortgage application once their offer on a property has been accepted.

However, prospective buyers should begin planning for their mortgage application well in advance – at least several months. This is especially the case for first-time buyers, who must familiarise themselves with the process and ensure they have a good credit score.

Make a formal mortgage application

You can apply formally for a mortgage after your offer on a property has been accepted. When this happens, your lender will send a surveyor to conduct a thorough valuation to ensure the property is worth the agreed-upon purchase price. Your lender will also examine all the financial paperwork that you’ve provided and conduct a credit search..

It’s worth remembering that your lender’s credit search will leave a footprint on your report, so if your application is rejected try to find out why so you can plan your next application accordingly.

Read more on this topic: What is the mortgage guarantee scheme?

How does it differ if you’re self-employed?

If you’re self-employed, obtaining a mortgage may be more difficult than if you were working for an employer, but it’s not impossible.

The key challenge is to prove you have a reliable income, so you’ll need to provide more evidence of how you make your money than other borrowers. In addition to documents requested for ordinary mortgage applications, self-employed people will also be asked for:

• At least two years’ certified accounts.
• SA302 tax return forms (evidence of your earnings) or a tax year overview from HMRC for the past two or three years.
• Evidence of upcoming contracts (if you’re working as a contractor).
• Evidence of dividend payments or retained profits (if, for instance, you’re director of a company).

How long does a mortgage offer last?

If your mortgage application is successful, the lender’s offer typically remains valid for up to six months. A re-mortgage offer usually has a shorter shelf life - around three months - because the purchase takes longer to complete.