Mortgage applications guide

Mortgage applications guide

Although a mortgage application can be exciting and life-changing, it can be overwhelming if you don’t have the right advice. There are many mortgage lenders in the market, each with their own policies on what they will or won’t accept. Being declined can be a huge blow.

The good news is that our mortgage brokers are experts in mortgage applications. They will guide you through the process and provide bespoke advice with each step of the way.

Contact us today to constitute financial advice or to begin a mortgage application.

The mortgage application process

Below is a timeline that will help you understand how the mortgage application process works.

1. Search for the best lender. An experienced mortgage broker will search the entire market to find the best mortgage products available. They will submit the mortgage application on your behalf and handle the entire process of a property purchase or remortgage. They will provide detailed explanations and make sure that everything runs smoothly from start to finish. A true whole-of-market broker can help you choose the right lender for your situation if it is more complicated (e.g., if you have bad credit or a history of debt).
2. Has it been approved in principle? You can only find out how much you can borrow, and not the purchase price. Or you can use a rough guide affordability calculator. An approved decision in principle is granted by lenders after assessing your personal circumstances, including your income, occupation, and financial obligations, as well as your credit history. Lenders will only grant an agreement in principle if all details provided are supported by supporting documents such as income verification, address verification, and ID. People often contact us to request a decision in principle before they make an offer on a house.
3. Search for the property that interests you and hire a solicitor. Remortgages are not permitted. Make a decision. With your AIP you can make an offer to purchase the property. Unless the vendor is actively involved or selling privately, you will normally make an offer to the agent directly. You have two options: you can either use a local solicitor or search online for one. Just make sure that the person you choose is approved by your lender. Your advisor should be able to help you. You should not pay any fees until the valuation has been approved. If there are any problems with the property, it is likely that any work done by solicitors will be refunded. You may need to finish within a very short time (e.g. If you need to complete within a short time frame (e.g., buying at auction), then it may be worth taking a greater risk and instructing solicitors to help you save time.
4. Request a valuation of the property. The lender will require that the property be valued by them as a minimum to ensure it is worth the price you have offered. You can request that the valuation be updated to include a homebuyer report and a full structural survey. Or, you can do your own survey. Just make sure to use a qualified RICS surveyor. It might be a good idea to compare the market on Rightmove and get an approximate valuation from Zoopla if you are considering remortgaging.
5. A mortgage is offered. A formal written mortgage offer will then be made to you and your lawyer. You can usually get an offer in a matter of weeks depending on the time it takes to instruct and schedule the valuation. Sometimes, however, it is much faster. If you need to quickly process your mortgage, make sure you have all the relevant documents.
6. Instruction to a Solicitor. Now is a good time to pay your upfront fees and get started on all legal searches and drafting the contracts. Although this can be the most tedious part of the purchase it can also be very quick if you’re applying for a mortgage refinance.
7. Contract exchange and completion. After the solicitors have drafted the necessary contracts and obtained all necessary searches from various sources, you will need to sign the contracts. This will confirm that you are legally bound to purchase the property and that the vendor is legally bound to sell it. Once you have received the money, the lender can request it. Once the money is in place, the vendor can proceed with the transaction. It usually takes about a week to complete, but it is possible to exchange the keys and close the transaction same day if necessary. After everything is completed, you can get the keys and move in. If you’re remortgaging, the money will be transferred to the appropriate parties.

 

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What you need to do for a mortgage application

You will need the following documents:

• Photo ID (passport/driver’s license)
• Documentation proving address, dated within the last three months: Utility bill, credit card statement, or council tax statement. Not a mobile bill.
• Evidence of earnings (last three months payslips and P60)
• All active accounts (*** Full bank statements for the last three months (see criteria below).
• Deposit proof (savings statement, gifted deposit letter)
• Credit reports (if you have a history of bad credit – Experian. Call credit & Equifax
• New property details (address, construction material, approximate year of build, detachment type, garage or number of parking spaces, number of bedrooms/bathrooms/kitchens/other rooms)
• Estate agent details
• Solicitor details
• Bank statements: Lenders now require all bank statements in order to satisfy the following criteria.
• You can keep the pages for 3 months, so you can go up to 01/11/2019 and then go back to 01/08/2019 with no missing pages
• You must be able to identify yourself – your name, address and account number are required
• Online statements must contain identifiable information and the URL of the website at the bottom. Bank prints – should contain identifiable information, the signature of the branch and an identification stamp.

Your application will be slowed down if you don’t have the proper documents for your mortgage application.

 

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Credit reports

A good mortgage advisor will review your credit report if you have had any adverse credit in the past. This will give them the same information lenders will use to evaluate the application in terms of each credit issue.

The best brokers have the market knowledge to do the research before applying to any lender. They can match your credit history and the criteria of the appropriate lenders. A credit search is performed on your file after a decision in principle has been made with a lender.

Multiple searches within a short time frame can negatively impact your credit score. It is important to avoid unnecessary searches with lenders that would not accept your application.

Advisors who are the best know that there are three major credit reference agencies and that each lender uses one of them. These reports can have different information and may look different so it is important to go through them all before applying to any lender. This will prevent you from being surprised and wasting time searching your file.

 

What are the requirements of a mortgage provider for my application?

A mortgage provider will evaluate the following to determine if they are willing to lend you money:

Income

Lenders will need to know your household income in order to determine the affordability of the mortgage that you are applying for. Each lender has a different approach to…

1. What they want
2. What kind of income do they accept
3. Based on your salary, they will determine how much you can borrow.

Some lenders require self-employed applicants have three years of trading experience, while others only require 12 months. Some lenders will accept 100%, while others accept 80%.

Lenders are also interested in your job type and length of service. This information will be used by lenders to determine the likelihood of the job being lost. People who are just starting a completely new role in a company are more likely than those who have been working for a long time to quit or be fired.

Outgoings

You might also need to consider things like credit cards, loans and pensions. A car loan of £500 per month would reduce your cash flow to pay your mortgage. However, it is still possible to obtain a mortgage using a loan and credit cards.

Age

To establish your maximum loan term, mortgage lenders will want to know how old you are. Because the monthly mortgage repayments for loans that are paid over shorter terms are more affordable, this will impact affordability.

A person earning £25k per year might be able to borrow up to £125k for 30 years but maybe only £50k for 5 years. Lenders have different ages they consider acceptable for work and retirement. They also have different maximum borrowers who can have the mortgage. While one lender might accept an admin worker until 70, others may limit the terms to state retirement age.

Property suitability

Lenders want to feel confident that your property will be used as security. If you default on your mortgage, they will need to sell it to recover their losses. Each lender will have their own opinions on what is acceptable. Some lenders will accept properties of nonstandard construction (i.e. Some will accept flats with a thatched roof or concrete structure, while others won’t.

LTV (Loan to Value)

LTV is the ratio of the amount that you borrow to the property’s value. LTV ratios are 50% for a mortgage of £100k and 50% for a property of £200k. LTV is important because it allows lenders to calculate the likelihood of losing the property if it is repossessed.

A mortgage application for £100k on a property valued at £200k is more likely to cover losses than a £190k mortgage with 95% LTV. The LTV is a measure of risk and the interest rate will almost always be higher if it is higher.

Deposit source

It is important to know where your deposit came from. This will help you stand out to a lender, who will likely consider you a lower risk than someone who has credit card debt and is always in overdraft.

Credit history

Lenders will need to know whether you have defaulted, made late payments, defaulted on a mortgage, or had any repossessions, bankruptcy, IVA or Debt management plan. Sometimes, they will also want to know why and how these matters occurred.

Dates are often the most important information. Most lenders have guidelines about how recent an issue should be considered acceptable. Some lenders say there are no issues in the past 6 years while others state that there have been none in the past 3 years. Others claim that there has been none in 12 months.

All of the above factors will have an impact on which lender will accept your application. It’s not just about passing credit scores. The products available to you will be affected by which lenders you are eligible. To get a competitive rate on a mortgage, it is important to have a good understanding of the market.

Strong market knowledge and a good mortgage broker will help you identify all lenders that you may be eligible for and give you the opportunity to choose the one with the lowest fees and rates. We’ll send you an inquiry and introduce you to one of our expert brokers.

They have extensive experience helping customers in similar financial situations.

 

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Why choose a Mortgage broker?

Our broker-matching service is free and will evaluate your circumstances in order to match you with a qualified mortgage expert. We have thoroughly vetted and trained the brokers and lenders we match you with. This is why our personalised service is so appealing to you.

What we do differently

Many mortgage brokers will claim they are part of the whole market. However, some of them work with a limited number of lenders that are large enough to be considered the whole of the market by the Financial Conduct Authority (FCA).

It doesn’t matter what, if the mortgage advisor isn’t familiar with the market and the criteria of the lender, it’s not worth having access to them. It can be difficult for aspiring borrowers to find a lender willing to approve their mortgage application if they don’t have the most straightforward of circumstances.

We are seeing this every day in the large number of people who come to us after being declined by another broker. Other times, people were offered exorbitant mortgage rates when they could have been eligible with many lenders that their broker wasn’t aware of. This often results in more competitive mortgage deals.

Our approach is different. We provide free information and connect customers to the right advice from an expert broker who specialises in the type of mortgage that they need.

• We will refer you to a specialist if you have your own business.
• We will refer you to a specialist in bankruptcy mortgages if you have been bankrupt previously
• We will refer you to a specialist mortgage specialist if you are a physician

Are you unsure if your application for a mortgage is eligible?

Do your circumstances seem more complicated than usual? Our mortgage brokers pride themselves on their market knowledge. They are the best people to find you a mortgage.

You don’t matter if you have poor credit, are self-employed, just started a job, or are unsure how much money you can borrow.

Do you need your mortgage application processed fast?

Our mortgage advisors have a red carpet express service and can prioritise mortgage applications for those borrowers who have received offers on properties and need approval immediately. To learn more, contact us today.

Do I really need insurance?

Some insurance policies are required (such as building insurance), while others can be taken at your discretion (contents insurance, life insurance / Income Protection / Redundancy coverage). It is advisable to search the market for the best rates and not just go to your bank to buy a policy.

You may find prices that are significantly cheaper elsewhere for the same policy than what your bank offers you in the branch. This should be something your advisor can do on your behalf. Before they begin any applications, make sure they are familiar with the entire market.

Ask yourself how much you could afford to mortgage the mortgage if your health is not good. What happens if you are not working for three months?

What happens if your partner dies or you are seriously ill? How would they pay the mortgage so they can keep their roof over their heads? In the event that you die, would you consider leaving a lump sum for your children?

 

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Applications for mortgages to the self-employed or buy-to-let

If you are self-employed and you are looking for a mortgage, the enquiry form below should answer all your initial questions. If you have any additional information, the advisor will get in touch with you. People who are looking for buy-to-let mortgages as freelancers may have different obstacles than those working full-time.

Most buy-to-let lenders require applicants to prove that they can pay their mortgage payments even if there is no rent. Buy-to-let borrowers should have an income of at least £20-25k. This could be self-employed, but lenders will often require an average of the last three years’ accounts to exceed this number. It can be restrictive for traders who trade less than this or declare a lower net profit.

Specialist buy-to-let lenders are available to help borrowers without minimum income. They just need to know that the first-time landlords earn at least some wages. Experienced landlords can often borrow money without having to prove any income.

When should you apply for a mortgage?

It is important to know when you can apply for a mortgage to get the home that you want. Before you commit to a property, it is a good idea to find out what type of mortgage you can get. Our advice is to first get a mortgage!

A majority of borrowers will need a mortgage to purchase a property. How will you know if you have the funds to pay it off? If you have to borrow £200k for £15k per year, it is not worth putting an offer on a property.

Estate agents are more sophisticated than ever. Agents require proof of funds and a deposit before taking a property off the market. It is time-consuming to apply for a mortgage. This includes getting the agreement in principle, obtaining a valuation, and instructing the right lawyer.

To give themselves the confidence to make offers, most people choose to obtain a decision in principle from their lender. You will be in a better buying position if you have proof of funds. There’s nothing worse than searching for the perfect home but not being able to get the financing to purchase it.

A mortgage under principle agreement promises the lender that they will lend the money provided you provide accurate information and the required documentation. It doesn’t guarantee to borrow as most lenders will underwrite the case when a full application has been made. They can also reject the application at any point, despite the initial agreement.

 

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Application for a mortgage in spite of bad credit

You might find it helpful to look at our bad-credit criteria tables if you are trying to obtain a mortgage. This will give you an idea of the possibilities based on your credit history, deposit amount and credit score.

The higher the problem, the more deposits are required. But you will be amazed at the options available to lenders today. Mortgages for customers with bad credit are becoming more common. It can be difficult to find a mortgage for bad credit.

This is not a matter of clicking on the best deal, searching through comparison tables and then filling in your details on the lender’s website.

Our specialists can arrange mortgages for those with bad credit in the following situations.

• Credit history is not required
• Credit score low
• Late payments
• Mortgage payments not made
• Defaults
• CCJ’s
• IVA’s
• Debt Management Schemes
• Repossessions
• Bankruptcy
• Customers with multiple credit issues are also eligible for mortgages

Credit issues can make applications more complicated and require greater detail to be underwritten. It’s usually not possible or recommended to apply online for a mortgage with poor credit.

Each lender is unique. One lender may accept your credit history, while another may not. It can be difficult to match you with a lender who will consider your application. You can still apply online, however.

Our advisors can provide remote assistance via email, phone, or video calling. They can also handle your application from beginning to end at your convenience. Customers love this service as it doesn’t require travel and allows them to spend more time helping.

The advisors are available to meet with you face-to-face in some areas of the UK if you prefer not to apply.

What effect will an overdraft have on my mortgage application?

Providers may not have a problem with an authorised overdraft that is only used occasionally and then repaid. Lenders are willing to overlook responsibly used overdrafts, just as a credit card that is only used occasionally and in a sensible manner is unlikely to impact a mortgage application.

 

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Do you prefer to use a broker or go directly to a mortgage lender?

Mortgage borrowers often ask this question because they feel that it is quicker, simpler, and more affordable to get to the source. However, the truth is that most mortgage brokers can help you save money, in cash or time. A broker is required to help you find a mortgage for bad credit. Most lenders that offer mortgages for those with adverse credit only work through intermediaries.

Brokers provide a professional service, and they will charge fees. However, if you are able to get the best financing possible, it is well worth the cost. So trusting an independent broker to handle everything is an important part.

They search the market to find the best deal for you. But they also manage the entire process from your enquiry through to the time you receive the keys or money at the bank. Remember that intermediaries are there for you and not the bank.

Talk to a mortgage broker for help with your application now

Call us today to get started on your mortgage application.

Our free service offers a mortgage broker-matching service. This will evaluate your situation and match you with the best mortgage advisor to suit your needs. Professional advice could help you save time, and money, and potentially damage your credit score.

Contact us today to arrange a no-obligation, free chat with the broker best placed to assist you with your mortgage application.

 

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