Buying a house is one of life’s great milestones, but as exciting as it is, the mortgage application process can sometimes feel overwhelming. While there are many steps to getting a mortgage, it doesn’t need to be stressful. So, if you’re planning on buying a property then read our helpful guide on how to apply for a mortgage.
What to do before you apply for a mortgage
Before you start applying for a mortgage, it’s a really good idea to fully understand your financial position.
Start by setting a budget:
Your budget for the total cost of the property will largely depend on what cash deposit you have available and how much money you will be able to borrow for a mortgage. Most lenders require at least a 5% deposit of the total value of the house, but it’s good to have 10% saved if possible.
The amount of money you will be able to borrow will depend on your salary – lenders will only allow you to borrow what they are confident that you can repay. To get an estimate of what you could borrow, use our free mortgage calculator.
Check your credit rating:
Applying for a mortgage is more than just how much money you have. Lenders will also want to be sure that you have a good credit score and no history of failing to pay any loans or credit cards. However, having no credit history at all can be just as detrimental as having bad credit. You can check your credit score by using a company like Experian or Equifax or Checkmyfile. If you find you have a poor credit history, or no history at all, you will have to address this and improve it before applying for a mortgage. Being on the electoral roll can improve your credit score so make sure that you are registered before checking your score.
Check the different types of schemes available:
If you’re a first time buyer, there are a number of government schemes that can help you get your first step on the property ladder.
Start collecting your documents:
When you’re ready to apply for your mortgage, you’ll need a number of documents to support your application including:
- Utility bills
- P60 for from your employer
- Previous three months’ pay slips
- Proof of ID (passport or driving licence)
- Bank statements
- Last two years accounts or SA302s if you’re self-employed
Applying for a mortgage
Once you’re happy that your credit score is good and you’ve worked out how much money you are able to borrow, it’s time to start looking at the different stages of a mortgage application.
Decide what mortgage is right for you
Finding the right mortgage deal can feel like a minefield as there are just so many to choose from. Do your research or seek professional help from a reputable mortgage broker. A good broker can help you identify which lenders are most likely to accept your application and will help you understand what type of mortgage is best for your circumstances. A broker will help you gather the correct documents and will explain all the charges and fees associated with buying a property.
Consider getting a mortgage in principle
When looking to buy a property, some people like to obtain a mortgage agreement in principle. This is when a lender agrees ‘in principle’ to give you a mortgage, subject to final checks and approval of the property that you want to purchase. This usually lasts for around 30 days and you might be asked to show one by an estate agent as proof of you being a credible and proceedable buyer.
Make a formal mortgage application
Congratulations! Once you’ve had an offer on a property accepted, it’s time to formally apply for a mortgage. If you’re using a mortgage broker, then they will take care of this for you. The mortgage lender will value the property to ensure that it is worth approximately the same amount of money that you are paying for it. They will also check all the documents you have supplied and conduct a formal credit check on you.
If the lender does turn you down, it doesn’t mean that you won’t be able to ever get a mortgage. It’s always worth finding out the reason for the mortgage being refused before applying to another lender and potentially facing the same issues again.
Getting your final mortgage offer
If the lender is satisfied with your credit report and your mortgage application then you will usually receive a formal mortgage offer within four weeks of applying. Sometimes this can take longer if there are any issues that arise during the valuation or if you are asked to supply further documentation.
Once you have your mortgage offer it is usually valid for six months. As it usually takes around four months to buy a house, the mortgage should be valid until you complete the process.
If you’re planning on applying for a mortgage in the near future and would like some advice then please feel free to get in touch with a member of our team. Key Solutions are an award-winning mortgage broker who offer a 100% mortgage guarantee and an unconditional service guarantee, so you can be safe in the knowledge that you’ll never be out of pocket when using our services.