Buying a new home is an incredibly exciting adventure. Before you can put an offer in for your dream home, however, you probably need to apply for a mortgage. But how does the mortgage process work, exactly?
That’s what we’re here to talk about today! Regardless of whether you are a first-time buyer, a homeowner looking to remortgage or you are looking to purchase a buy-to-let property, you’ll have to tackle the process of applying for a mortgage. A mortgage is, most likely, the most sizable loan you will ever take out, so it’s important that you know exactly what’s what when it comes to securing your mortgage, and how to best prepare yourself for the process. Here at The Mortgage Brokerage, we’ve helped countless individuals to secure a great deal on their mortgage, so we know the process inside-out!
So, without further ado, let’s get into it…
How will you know when you are ready to start applying for a mortgage?
The most important thing to consider before you begin the mortgage application process, is how much you can realistically afford to borrow.
Standard affordability criteria outlines that a lender will loan you up to four times your income. If you are applying as a pair, your combined income multiple will be the total amount that is considered.
Before you start viewing properties, you also need to have your deposit more-or-less ready to go. When you’re saving your deposit, remember that the more you can save, the better the mortgage deal you are likely to secure.
Once you have considered these factors and taken the time to scrape together a strong deposit, you can begin browsing through the properties on the market. When you’ve found the property you’re after, that’s when the mortgage process truly begins!
The first step: Get in touch with a broker!
When applying for your all-important mortgage, having access to the whole market is incredibly beneficial.
Brokers can tap into deals from every corner of the mortgage market, connecting you with the very best deals available, some of which will only be made available to borrowers who go through a broker.
A professional broker will take the time to carefully assess your individual circumstances, before presenting you with a wide range of different mortgage deals that suit you and your needs. Browsing the market can be an incredibly time-consuming process if you choose to do it yourself. With a broker, however, you can offload all of the hassle and leave it up to a professional, who can scour the present market much more quickly and efficiently.
At this early stage in the mortgage process, your broker will also carry out a ‘soft check’ on your credit history. This soft search will not show up on your credit file or impact your credit score, but it will provide them with enough information to create a solid picture of what sort of deals will realistically be available to you.
The second step: Securing an Agreement in Principle (AIP)!
As soon as your broker has assessed your lending potential, they will provide you with an Agreement in Principle. This document is also known as a ‘Decision in Principle’ or simply as ‘Mortgage Pre-approval’.
This all-important document does not mean that you have secured a mortgage de facto. However, it does confirm that a lender has preliminarily agreed to provide you with a loan based on your credit score, pending the provision of a number of important things, such as proof of earnings, proof of ID, a hard credit check and an independent property valuation.
Once you have an AIP, you are in a prime position to put an offer forward on your property of choice.
The third step: Time to make an official application!
Was your offer accepted by the seller? If so, congratulations! It’s now time to begin the official application process for your mortgage.
Your broker will now take care of everything during this time, and they’ll only contact you if they need something from you. At this point, a hard credit check will register on your credit record, and your personal information will be closely assessed.
The fourth step: It’s time for an independent property valuation!
Now it’s time for a valuation to be carried out by an independent surveyor.
Depending on the outcome of the valuation, your loan-to-value mortgage ratio may increase or decrease. If this is the case, the interest rate you are offered may be impacted.
The fifth (and final!) step: Your official mortgage offer!
Now, if everything submitted by your broker to the lender was in order, you should now receive your official mortgage offer.
If you choose to accept the offer, you’ll need to employ the services of a solicitor who can act on your behalf and undertake the conveyancing process and manage all proceedings from here-on-out! As soon as contracts have then been exchanged, and a completion date pencilled in, the property is yours! Congratulations!
If you are looking to secure a mortgage, we can help. Simply get in touch today to find out more.
