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How do I get a mortgage?

A step-by-step guide to the process of getting a mortgage!

How do I get a mortgage?

To purchase property in the UK, you may need to take out a mortgageThis is a loan given to you by a lender in order to buy the home.

Essentially, a lender will give you the money that you need to buy the home and once you move in you begin repaying them in monthly instalments.

Getting a mortgage can be a long process, but it doesn’t have to be a complicated one. We’ve compiled a step-by-step guide to help you through the process.

Step 1: Consider what you need

Before you begin the process of getting a mortgage you need to consider whether purchasing property is a viable option for you right now. In order to feel secure giving you the loan, a lender will need to be sure you can keep up with the monthly repayments ; for this reason, it’s important to go through your own finances. Do you have enough money saved to make a deposit on a house, and do you have enough income to make monthly payments?

Lenders are also likely to check your credit history, so make sure you have a good credit score before applying. If you have bad credit, you’ll want to look into ways of improving your credit score or it may be difficult for you to get a mortgage.

If you are comfortable that you can afford a mortgage, it’s also important to know what price range you are looking to purchase in before applying. You don’t need to have a specific property in mind (though you may do already), but you should do some research on the area you want to live in or the type of property you want to buy. This way you can be more confident about how much money you are going to need.

Step 2: Find a mortgage broker

While you can go straight to a lender to apply for a mortgage, it is a good idea to use a mortgage broker to help you through the process. A lender is going to have a vested interest in getting you to take out a mortgage with them, whereas a broker is there to scour the market in order to find the best deal for you. Though it may seem like an extra cost to pay for a mortgage broker, often they  save you money in the long run.

Remember that mortgage brokers generally work on commission, so they are going to want you to find the best deal so that you make an application and they can receive their pay. They may also get payment from the lender, but they are obligated to be impartial and only recommend lender deals that work for you and don’t put you under financial pressure.

As well as finding you the best deal they can, a mortgage broker is also useful to guide you through the process as it goes on. They will have lots of knowledge about the housing market, so remember to keep asking them questions whenever you are lost or confused - they are there to help you!

We recommend the Mortgage Advice Bureau as expert mortgage brokers.

Step 3: Assessment and preparation

When you approach your chosen lender, but before you formally make your application, they will want to assess you and make sure that they trust you can pay the mortgage. This is where it comes in handy that you have been through your own finances, as you can anticipate what information they may ask for.

At this stage, the lender should also make any information about the service they provide clear to you and your mortgage broker. They should go through their process and what it should cost you, this includes any hidden fees in addition to the loan such as expenses or cancellation fees. If any of this information is unclear to you, remember to ask your mortgage broker to help clarify it.

Step 4: Decision in Principle

Before you submit your mortgage application, it may be helpful to you to get a Decision In Principle (DIP) with your chosen lender. This is also sometimes called an Agreement In Principle (AIP) or a Mortgage in Principle (MIP).

A DIP is essentially a written agreement from your chosen lender that they would give you a mortgage if you pass their final checks and everything you have said so far is accurate These final checks may include a further look at your credit score, this may be a soft or a hard credit check. You should ask your mortgage brokers advice on what kind of check they will likely do and what is best for you.

While a DIP is not a necessity, it puts you in a good position when making an offer on a property. It shows you have done your research and are likely to be approved for a mortgage.

A DIP will last around 6-9 months, meaning that it is a helpful safety net to have if your house search takes longer than you anticipated or an offer does not go through. If you haven’t found a property in the allotted time, you will have to get a new DIP from your lender.

It’s important to note that a mortgage in principle is not a promise of a mortgage, it just shows that from preliminary checks you would be likely to be approved by that lender. You are also not obligated to use the same lender you received your DIP from – a better deal may come out with another lender and you can go with them instead.

Step 5: Begin Application

Once you’ve made an offer on a house, you can formally submit your mortgage application to your chosen lender. They will then perform a valuation of the property to make sure it’s worth the money you’ve agreed to pay They will also require some mortgage documentation and paperwork from you along with a more thorough check of your credit record.

The lender will generally take between 18-40 days to review your application and come back with a decision. If they reject your application at this stage, then it’s important that you find out why so you can amend the issue for future applications. If they accept your application, you will receive an offer.  

Step 6: Binding Offer
After your application has been accepted, the lender will give you a binding offer, along with a Mortgage Illustration Document. This will explain all the terms of the mortgage, including the deposit and the amount you must repay monthly.

You will then be given a window (usually around 7 days), known as the reflection period, to review the terms of the offer and accept or reject it. While you are taking this reflection period, the lender cannot change or withdraw their offer, unless certain rare circumstances arise; for example, they may have found some of the information you provided to be incorrect.

Step 7: Exchange and Completion

Once you have accepted the lender’s offer, it’s finally time for you to buy your new property. Once you have all the necessary paperwork, you and the = seller will sign your contracts, which your respective solicitors will then exchange. Your solicitor at this point will contact the mortgage lender to realease the funds and pay the seller. They will also transfer your deposit.

Your conveyancing solicitor will organise the completion date, which is when you can move in from. From this point on you have a mortgage and you will begin making repayments.

How Long Will It Take?

The time it takes to get a mortgage can vary, depending on how long it takes to find a suitable lender, get all the paperwork in order and have your offer accepted. You may be waiting ap to 6 weeks for your mortgage application to be accepted. In addition, the exchange and completion time can range drastically from weeks to months, due to searches, surveys and other elements of the purchasing process.

This presents another advantage of using a mortgage broker, as their help and expertise can help you speed up many parts of the process – cutting down on the time taken to find a mortgage product that is appropriate for you, and you are likely to be approved for.

In a nutshell, the process of getting a mortgage can feel complicated but is made easier with expert advice. Give yourself enough time and start looking into it as soon as you feel you are financially ready to purchase a new property.
 

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very useful and easy to navigate. after comparing prices, it is a good idea to check out that company for customer reviews, as cheapest not always best. although in my case the cheapest also got the highest rating.

the doc on 31/01/2020

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