A mortgage application involves a credit check as well as questions about your affordability and this can feel like a mortgage minefield without guidance from an expert.
Mistakes on an application for a mortgage can result in rejections, so read through our short guide to prepare yourself and avoid wasted money in application fees that might not result in an approval.
Don’t apply for a mortgage without knowing the lenders that will accept you
Whether you’re a first time buyer or have experienced the mortgage process before, the best time to apply for a mortgage is after you have received advice from a broker who understands your financial situation. This can help to avoid crucial errors in your application.
Our brokers know the questions and checks that lenders may ask and prepare you ahead of applying to match you with the most relevant lender.
Using this information as well as their resources and knowledge of the market, they can compare numerous rates and agreements to find a lender that can offer a mortgage deal that suits your requirements as a borrower.
Never apply to multiple lenders within a short time frame
There are consequences for your credit score when you apply for more than one loan or line of credit within a short space of time. Multiple applications for loans can suggest that you’re reckless with money and can make it more difficult to obtain credit.
Don’t forget your documents!
Your mortgage broker will ask you to collect documents you will need for the mortgage application process ahead of you applying to a lender. It’s important for your application that you have the correct documents.These may include:
Your passport or driver’s licence
Utility bills
Proof of benefits received
P60 form from your employer
Your last three months’ payslips
Bank statements of your current accounts for the last three to six months
If you’re self-employed, a statement of two to three years’ accounts from a chartered accountant
Tax return form SA302 if you have earnings from more than one source or are self-employed
How does the mortgage process work?
There are 5 key steps that you’ll need to take to apply for a mortgage and knowing them can help you avoid faults and delays.
Find a lender
If your circumstances are a little more complex i.e. you have a less than perfect credit history or a complex income, a mortgage broker can help you help a lender, even in instances when you’ve previously been rejected for a mortgage.
Our mortgage brokers can complete your application and read through the terms and conditions of all lender agreements on your behalf. They’ll know which terms are most suitable for you and if they think they can find you a more financially beneficial or affordable deal elsewhere, they’ll let you know.
Get a mortgage in principal
You might hear a broker or lender refer to this as a mortgage promise or an agreement in principle. At this stage, a lender looks at your eligibility for their mortgage products and rates.
They’ll look at factors like your debt to income ratio, the size of your deposit and your credit history to decide whether or not to give you a mortgage in principle. You should always check your credit score ahead of applying for a mortgage or any line of credit as this can help you assess whether a lender will approve you.
This allows you to start looking at properties, knowing that a lender is likely to loan to you, assuming you have the documents needed to verify your address, ID, income, etc.
Find a property in your budget
Once you have a good idea of how much you can borrow, you can begin your search for a property. You should also search for a solicitor who specialises in property as they can oversee the legal process, including the exchange of contracts.
To put an offer in for a property, you would usually contact the estate agent directly and your mortgage advisor can help you with this, giving advice on properties sold nearby for comparison.
Get an independent valuation
Your lender will want an independent valuation of the market value of the property you want to buy. This helps them to determine the condition of the property and whether the amount you have offered to pay for the property is in line with its value according to the valuation.
Mortgage approval
If the valuation goes ahead smoothly and all other criteria checks including proof of identification and income are met, you should be issued a formal mortgage offer.
Your solicitor should now prepare and have relevant legal documents drawn up for all parties to sign. Once this process is complete, you can exchange contracts and money from your lender will be sent to the vendor for payment of the property.
Have a question about how to apply for a mortgage?
Buying a home, whether your first or not, is exciting but we understand that there may be times of uncertainty or nervousness, especially if you’re eager to avoid mistakes on your application.
Most of the time, knowing the answers to the questions that surround your worries can provide clarity and reduce your concerns.
If you have a niggling question, send an enquiry via our website and one of our expert mortgage advisors will answer as soon as possible.
023 8023 5555