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.
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:
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:
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.
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.
Mortgage lenders have a thorough process for ensuring borrowers can actually afford the mortgage for which they’re applying:
All of these checks are designed to help lenders determine how much you could borrow and repay.
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.
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:
You should also contact the 3 main credit agencies -- Equifax, Experian and TransUnion -- to check your score and ensure none of the reports contain erroneous information about you.
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.
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.
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:
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.
If your mortgage application is successful, the lender’s offer typically remains valid for up to 6 months. A re-mortgage offer usually has a shorter shelf life - around 3 months - because the purchase takes longer to complete.
Yes, you can apply for a mortgage online. It’s a complex process, however, so you may find it worthwhile to receive professional advice, especially if it’s your first mortgage. The more information you have at hand, the more likely you are to get a good deal.
It depends, but the average time for a mortgage approval is between 2 to 4 weeks. Decisions within 24 hours are rare, so expect the lender to take a little time processing your application.
There’s no minimum credit score to have your mortgage application approved, so it will vary from lender to lender. Check the lender’s specific lending criteria for details. It also depends on the credit rating agency.
For instance, with Equifax or TransUnion, a score of around 600 is considered fairly good for a mortgage application. But with Experian, the UK’s largest credit agency, a score below 720 is considered poorer than normal and could affect how much you’re able to borrow for your mortgage.
It varies considerably, but you should generally try to save at least 5% of the cost of the home for the deposit. However, if you have enough money to put down a higher mortgage deposit – say, 15% of the cost of the home – you will likely be offered better mortgage rates.
Mortgage lenders typically check your financial history over the past six years, though there is no industry rule about that timeframe. This is usually a long enough period for them to get an idea about whether you’re a trustworthy borrower.
It is alternately known as a ‘booking’, ‘reservation’ or ‘application’, but lenders typically charge between £100 and £200 when your application goes through. Some lenders may charge more than that, while others not at all. All mortgage-related costs should be described in the mortgage illustration document.
Typically, mortgage lenders want to see that you’ve been employed at the same place of work for between 3 and 6 months when they assess your application. At the very least, applicants will be asked for, and need payslips from the last three months as part of the mortgage application process.
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