Applying for a mortgage

Buying a home is probably the most expensive purchase you’ll ever make and you want to ensure the process runs as smoothly as possible. A mortgage application can seem complicated and be daunting but you can break it down into smaller steps to remove any stress. It’s best to prepare for your mortgage application as early as possible to improve your chances of success.

Once you’ve done everything you can to be ready for a successful mortgage application, it’s time to take the next steps towards obtaining your mortgage.

Decide what type of mortgage you prefer

It’s important to understand the differences between the various mortgage types available. You need to narrow down the options to choose a type that is best suited to your circumstances. For example, you need to decide whether you prefer a repayment or an interest-only mortgage. Then you need to choose whether a fixed rate or variable rate is better for you. A mortgage broker can help you with this. As well as explaining the main mortgage types to you, a broker can assess your situation and search for a mortgage product that caters specifically to your needs.

Have your paperwork ready

It’s best to have all of your paperwork organised in advance to avoid delays with your application. The documentation required can vary between lenders but, in general, you need the following:

• Proof of ID, such as your driving licence or passport
• Proof of your address, which can be a council tax bill, utility bill or credit card bill, etc.
• The last 3 to 6 months of bank statements, depending on the lender
• Proof of your deposit, such as statements from a savings account. If someone is gifting you the deposit, you will need to provide a gift letter.
• If you’re employed — the latest P60 and at least the last 3 months’ payslips
• If you’re self-employed — the last 2 to 3 years of certified accounts, SA302s and tax year overviews
• If you receive a pension income — your pension statement or pension payslips

You will also need to provide your solicitor’s details as well as those of the estate agent you are buying the property through.

Get a mortgage in principle

A mortgage in principle is a conditional offer from a lender. It states that they agree ‘in principle’ to lend you a certain amount of money based on the documentation you have provided. Whilst this isn’t a guarantee, it demonstrates to estate agents and sellers that you are serious about buying. It means estate agents can show you properties up to that loan amount and it makes sellers more comfortable about accepting an offer from you.

A lender will usually carry out a credit check on you before granting a mortgage in principle. Too many checks carried out by lenders in a short space of time can be harmful to your credit score and can be detrimental to your mortgage application at a later stage. Therefore, avoid approaching different lenders for a mortgage in principle and try to find a lender that carries out a soft credit check. This will be visible to you on your credit file but not to other lenders. A mortgage broker will know which lenders run soft checks.

A mortgage in principle is generally valid for 6 months, depending on the lender. If you haven’t found a suitable property within that time, you may have to ask the lender to issue a new one.

The formal application process for your mortgage

When you have found a property and your offer has been accepted, the next stage is the formal mortgage application. Make sure the information on your mortgage application form is accurate — it must match the documents you provide. A mortgage broker can help you prepare your application to ensure it is correct and complies with the lender’s requirements.

The lender will review your paperwork and carry out a credit check on you. This will show on your credit record. They will also arrange for a valuation to be carried out on the property. This is to check that the property has been priced correctly and is acceptable for a mortgage. The surveyor will note any major defects that may affect the price of the property. They will also check the prices of similar properties sold within the surrounding area.

Once the lender has finished carrying out the affordability checks on you and is happy with the valuation, they will approve your application and issue you with a formal mortgage offer.

What happens if the surveyor down-values the property?

Having checked the property, the surveyor may deem that it is priced too high or that your offer is higher than the property’s value. This could be because the seller overvalued their property, the surveyor found structural defects or due to the market conditions.

Don’t take a downgraded valuation as a negative point. Aside from preventing the lender from lending more than the property is worth or lending on an unsuitable property, it also protects you. It stops you from paying over the odds for your property. If you pay more than the property’s value, it can put you into negative equity.

Should this happen, you can get in touch with the seller to renegotiate on the price. Any potential buyer needing a mortgage to purchase their property will have the same issue as every lender will expect a valuation to be carried out. If the seller really won’t budge on the price, however, and you still want the property, you have to seriously consider whether it is worth trying to increase your deposit to cover the extra amount. For example, you may have offered £250,000 on a property in Bexleyheath. The valuation confirmed the property’s value to be £230,000. As it has been down-valued by £20,000, you can either ask the seller to accept a lower offer of £230,000 or consider paying an extra £20,000 yourself.

Your mortgage offer

Mortgage offers normally take about 4 weeks to process from the application stage. They are usually valid for 6 months, depending on the lender. Remortgage offers, on the other hand, tend to last for 3 months. From this point, your solicitor continues with the conveyancing process until you are ready to exchange contracts.

When you have exchanged contracts, your solicitor will request the mortgage funds to be released by your lender. You can then look forward to receiving the keys to your new home on the agreed completion date.

Get help with your mortgage application from a professional broker

Take advantage of the expertise and knowledge that your mortgage broker in Kent, London or Edinburgh has to offer. Buying a property should be an exciting time and a broker can help with your mortgage application to ensure it’s a stress-free process.

When applying for Welling and Pimlico mortgages, your broker can assess your situation and search for the best mortgage deals for your needs. They can ensure your application is correctly prepared and presented to the lender most likely to approve it. By handling your application, your mortgage broker can ensure there are no unexpected delays due to missing information and no unnecessary credit checks by multiple lenders. Your broker can deal with the nitty-gritty of the application process so that you don’t have to. This ensures that the process is a straightforward and successful one.