Searching for your dream home is an exciting process, especially when you have a dream home in mind, but sometimes finances can cause a halt on you getting that step closer to buying your new home due to deposits and mortgage payments.
Buying multiple properties or even being a first-time buyer, it can be an over whelming process especially dealing with finances, solicitors and surveyors. After saving a healthy deposit amount you may be wondering what’s the next step? Getting a mortgage in the Uk can be full of surprises but we’ve created an article which will guide and help prepare you for how the mortgage application process works.
Preparing yourself
Uk Mortgage Application process can take 4-6 weeks for your vendor to approve your’ application, this may vary depending on the type of mortgage you are applying for and the documents you provide.
When applying for a mortgage make sure you prepare yourself by collecting all the documents you will need for a Uk mortgage application which may consist of…
- If you receive any benefits, evidence of those.
- Current account bank statement for the last 3-6 months.
- Utility bills.
- Your last 3 months’ payslips.
- P60 from your employer.
- Proof of identity (passport or driving license)
If you are self-employed, you would also need…
- Tax return form SA302
- Bank statements to support what your SA302 says.
- Statement of 2- or 3-year’s accounts from an accountant.
How you spend your money…
You may also need to show your outgoings, including how much you’re borrowing on credit cards and other loans.
- Utility Bills
- Council Tax
- Insurance polices
- General living costs (travel, childcare and entertainment)
Keep in mind you must be accurate with all the information you supply on all your application forms, making sure the information you provide matches the documents you give. All figures should be accurate and not rounded up or down. Make sure to provide all the details of the property address you want to buy, the estate agents and your solicitor. This may all differ depending on the lender as they may ask for more paperwork depending on different criteria’s around income and outgoings. Ask your lender / independent mortgage adviser what else you may need. You need to consider online print outs of statements, utility bills might not be accepted, you can use original print outs of your documents or have copies certified by your solicitor, your bank or your utility provider.
The process…
- Find out how much you can borrow: You could either start the mortgage process by contacting lenders directly and asking how much you can borrow, or you might get a better deal by using a mortgage advisor who specialises in the mortgaging market. With a mortgage advisor you can compare multiple mortgage deals and identify which one is the best one suited for you, rather than restricting yourself to a few mortgage products from a specific lender which is more time consuming. Some lenders have high requirements where they only lend money to people who have an excellent credit score history but using a mortgage advisor you can work out which lenders are most likely to give you the funds without the rejection.
- Apply for a mortgage in principle: When getting yourself a mortgage advisor the first thing they will do is obtain for a MIP (Mortgage in Principle) referred as DIP (Decision in Principle) this is a document that indicates how much a particular lender is likely to give to you based on your current financial circumstances but will not guarantee that you’ll be able to borrow the money you need. This document can be used when property hunting to prove to sellers/ developers that you’re in a good financial position. If you were to express your interest in a property but you did not have a MIP the seller could overlook your application and sell the property to someone else.
- Reserve and apply for your mortgage: When you have found your dream property and have decide to go ahead with the purchase it’s time to reserve and apply for your mortgage, this is the point the lender will take a more thorough look at your finances then they did during the MIP stage. You will need to supply evidence of your deposit and proof of your income, if you are self-employed you may have to go through more in-depth checks and will be expected to supply proof of the last 2- 4 years of your income.
- Application being processed: Once your application has been submitted it’s time to relax and wait for it to be processed as it may take anywhere from a few days to several weeks so be patient. Within this process the lender will look into your finances as well as assessing the property that you wish to buy, checking it is worth the amount that they are lending you.
- Accepting your mortgage offer: Once your lender has completed all the checks that needed to be done, they’ll follow up and get in contact to let you know their final loan offer. Accompanied with your deposit this loan should be enough to purchase the property you wish to buy. If the offer is enough you can proceed with your purchase. If the lender decides to offer you less, you may have to negotiate with the seller to reduce property price, but if the seller refuses you will have to look for a new property to purchase. If you decide not to proceed with the sale the lender may reassess their original offer but keep in mind, they are not under obligation to honour their original offer if you choose to purchase a different home, so you need to make sure that you don’t make any irrational decisions and reassess your options.
- Exchanging Contracts: When you have got your mortgage in place you can now exchange contracts with the seller/ developer; your solicitor will help you throughout this process. Finally, you will be given a completion day which indicates when you can finally move into your dream home and celebrate such amazing news!
Reasons why your mortgage may get declined.
When completing your mortgage application and waiting for it to be accepted there are instants where your application could be declined for a few reasons. Some of the reasons can vary from…
- Having a poor credit history
- Not being registered to vote
- Too much debt
- Having too many credits applications
- Having any pay day loans within the last 6 years
- Administration errors
- Not earning enough
- Small deposit
- Not matching the lenders criteria/ profile
- Self-employed/ contract worker- steady income and future lined up work
- Lived in the Uk for less than 3 years
If your application does get declined for any of these reasons your mortgage advisor is there to help and explain the reasons why, this may be a small error that could be resolved, something you may need to investigate changing or requiring more paperwork. There are instants where the lender may have entered the incorrect details on their end, this is where your mortgage advisor can double check if it was a minor detail that caused your applicated to be rejected.
How Mortgage Advisers can help with the mortgage application UK process and processing
A mortgage advisor can save you time, effort and most importantly money by utilising their expertise and advice to get you the best deal you might not have found on your own.
Having a mortgage advisor will help you throughout the whole mortgage process, making sure you understand the process as well as making sure to get you the best deal possible. Throughout the mortgage process they will become your personal guide, guiding you through potentially daunting prospects deciding what type of mortgage is best suited for you and your needs/ personal situation. One of the main reasons it is a great idea to get a mortgage advisor is they will clarify the different types of mortgages, rate and how long is best to borrow for. Having a mortgage advisor can help to speed up the mortgage process as often they will complete a lot of the paperwork and admin that comes with the process.
At Conran we charge you no fee to arrange your mortgage.
Use our mortgage calculator online on our website to find out what size mortgage you can get.
If you are looking into purchasing your first home or buying another new home our team at Conran will be happy to help you throughout your buying process. We also have our mortgage advisors and estate agents on hand who have 10+ years of experience in the mortgaging and real estate market.
Why wait? Get in contact with us today.