We have put this short guide together to highlight the main aspects and things to consider relating to the mortgage application process. If you have any questions then feel free to contact us.
To save time and to avoid any errors in working out how much you could provisionally lend it would be worth compiling the documents together so that your mortgage broker can accurately advise you using the correct information. These are the typical documents required by a mortgage lender:
Payslips – 3 months or if you are self employed 3 years accounts and SA302 document from HMRC. If you do not have your SA302’s then you can order them from the HMRC. If you do not have 3 years accounts then compile your latest accounts to date.
Bank Statements – Lenders are often asking for copies of your bank statements that show your salary going in to your account and your regular expenditure.
Proof of ID and address – Your drivers license / passport and a utility bill or bank statement dated in the last 3 months that has applicants names on it are the most common forms of acceptable address ID.
Affordability – Your mortgage broker and mortgage lender will ask for a figure regarding your monthly expenditure. Your broker will go through this with you so if you have an idea before hand of what your monthly outgoings are then this will help to work out your affordability.
If you think that you may have a problem with credit, whether this be a missed payment, ccj , arrears or even applied for lots of credit recently it would be worth checking your credit before seeing a broker. You can use online services such as www.noddle.co.uk for free which will allow you to obtain a copy of your credit report. The benefit of this is that you and your mortgage broker will not be putting a mortgage application/ agreement in principal in blind. They will already have an idea of your credit score which may affect the decision on which lender they will recommend. Most lenders when you apply for an agreement in principal will do a hard credit search on your report which will remain on there and may affect your credit score moving forward. If you do a check yourself through a site such as noddle it will not have any affect on your credit score.
Once you have the above documents then it is time to see what your options are. If you want to find the most competitive mortgage that will fulfil your requirements and be sure that you stand the best chance of fitting a mortgage lenders criteria then you should use a mortgage broker. There are different types of mortgage brokers, you should ensure that they are independent whole of market mortgage brokers. whole of market brokers not tied to any one company. This means that they represent you the client in finding the most suitable mortgage.
If you go direct to a bank or building society then they will not be able to advise you on whether or not the deal that you are applying for is the best for mortgage market on the market. They can only offer you their products.
A mortgage broker will have a good idea of whether or not you will fulfil the criteria for a certain mortgage lender, this means that you do not waste time, money and credit searches applying to lenders who you may get declined by.
The mortgage brokers job is to get a good understanding of your circumstances and objectives. After they have conducted a fact find to ascertain your details they will then use this information to give you an indication of the amount that you are likely to borrow. Different lenders will be able to offer you different amounts at varying costs. The mortgage broker will discuss your options with you and help narrow down your options until they find the most suitable lender for you. If they feel you are in a position where you cannot get a mortgage then they can advise you on why that is and what you will need to be able to obtain one.
The above sounds simple but it requires years of experience and expertise to be able to choose the right lenders to ensure that a mortgage is processed smoothly. Mortgage brokers will know how certain lenders work and what to look out for regarding mortgage lenders criteria. Once an idea of how much you can borrow has been achieved and what the costs are then you will be in a position where you can start to look for properties.
Once you know how much you can afford to borrow and are happy with the repayments and costs then you can go house hunting.
After you have found a suitable property then you can put an offer in to buy the property, once your offer is accepted by the vendor then you can start your mortgage application.
Your mortgage broker will be able to apply for an agreement in principal with your chosen mortgage provider. At this stage the mortgage lender will do a credit check on you and assess your application. This is usually done instantly on line so your mortgage broker will be able to produce one for you usually within 24 hours. The agreement principal document shows that a mortgage lender is willing to lend to you up to a certain amount as long as you can provide the relevant documentary evidence and a satisfactory valuation is conducted. The agreement in principal is often requested by estate agents to show that you can obtain an appropriate mortgage, it also gives you an indication that the mortgage lender is happy to lend to you. In some instances the agreement in principal is done before you start looking for houses so that you have a firm idea of the amount that you able able to borrow.
After the agreement in principal is done the mortgage broker will proceed to a full application. At this point they will add additional information to the agreement in principal and submit the full application. Once it is submitted they will provide you with a list of requested documents that the mortgage lender requires to assess the case such as payslips, bank statements, proof of deposit etc.
Your mortgage broker will discuss your options regarding protecting your mortgage balance and monthly payments in the event of death or illness. These can include life insurance, critical illness cover, income protection, accident sickness and unemployment cover. They will also discuss buildings and contents cover with you as you r mortgage will not be able to complete without adequate buildings insurance.
The mortgage lender will assess the mortgage application and correspond with the mortgage broker on any additional underwriting requirements. Usually they will confirm that all the evidence and application is satisfactory and then they will instruct the valuation. Some lenders will request that a valuation is done before assessing a case which means that the mortgage broker needs to be confident that you fulfil the criteria before application so that you do not lose a valuation fee if the case is declined.
From the initial mortgage enquiry the mortgage broker will be in contact with the mortgage lender to ensure that the mortgage stands the best possible chance to go through will go through with them. Once the application is submitted it is the mortgage brokers responsibility to communicate with the mortgage lender and customer to make the application go through as smoothly as possible. Using their experience they will know how to manage the cases in the best possible manner and will know how to resolve any potential problems.
As long as the valuation comes back within the lenders limits and they have successfully underwritten the mortgage then they will produce a mortgage offer. This is confirmation that the lender will provide you with the required mortgage. A copy of this document will go to you , the broker and the solicitor / conveyancer.
Once the mortgage offer has been received by your solicitor they will work on setting a date for an exchange of contracts. This is the stage where the solicitors/ conveyancers will set out the property transaction in writing and the buyer will put down a deposit typically 10% . They will also outline a completion date for when the property will change hands from vendor to buyer.
All protection policies and buildings insurance will be aligned with the start date of your mortgage to ensure that you are covered.
Once the sale has completed you will have the keys to move into your new home.