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A Step-By-Step Guide To The Mortgage Application Process

MORTGAGES | 05.05.2017

Buying a home, whether it’s your first or fifth, can be incredibly stressful. For first time buyers in particular, organising your finances and dealing with everyone from solicitors to surveyors can be a little overwhelming.

Buying a home, whether it’s your first or fifth, can be incredibly stressful. For first time buyers in particular, organising your finances and dealing with everyone from solicitors to surveyors can be a little overwhelming.   Once you’ve saved a healthy deposit and you’ve set money aside for all the infamous home buying costs, you may be wondering what the next step is. Although the home buying process can be full of surprises, here our step-by-step guide to how the mortgage application process could go.

Find out how much you can borrow

Some homebuyers start the mortgage process by contacting lenders directly and asking how much they can borrow. However, you may access a better deal by using a mortgage broker who knows the whole mortgage market like the back of their hand. By using a broker, you can compare hundreds of mortgage deals and identify the best one for you, rather than restricting yourself to just a handful of mortgage products from one particular lender.   Some lenders have tough lending criteria and will only lend money to those who have an excellent credit history. By seeking the help of a broker, you can identify the lenders most likely to give you the funds you need, without risking rejection.

Apply for a mortgage in principle

One of the first things a mortgage broker will do is obtain for a Mortgage in Principle (MIP). This can also be referred to as a Decision in Principle (DIP). This is basically a document that indicates how much a particular lender is likely to give you based on your current financial circumstances.   This document won’t guarantee that you’ll be able to borrow the money you need, but you can use it when house hunting to prove to sellers and/or developers that you’re in a good position financially.   If you were to express an interest in a property but you didn’t have a mortgage in principle, this could see the seller overlooking your application and selling the property to someone else.

Reserve and apply for your mortgage

Once you find the property you like and have decided to proceed with the purchase, it’s time to reserve and apply for your mortgage. At this stage, the lender will take a much more thorough look at your finances than they did during the MIP stage. You’ll need to show proof of income along with evidence of your deposit. If you’re self employed, you may have to go through even more checks and will be expected to show proof of income for the last two to four years.

Wait for your application to be processed

Once you’ve submitted your application, you may have to sit back and wait for it to be processed. This can take anywhere from a few days up to several weeks. Not only will the lender look into your finances, they’ll also assess the property that you wish to buy, checking it’s worth the amount that they’re lending you.

Accept your formal mortgage offer

Once your lender has completed all the ‘behind the scenes’ checks, they’ll get in touch to let you know their final loan offer. When accompanied with your deposit, this loan should hopefully be enough to purchase the property. If it is, you can proceed with the purchase.   If the lender offers you less than you need, you may have to negotiate with the seller to reduce the property price. If the seller refuses to drop their price, you’ll have to walk away and find a different property.   If you do decide not to proceed with the sale, the lender may reassess their original offer. They’re under no obligation to honour their original offer if you decide to purchase a different property.

Exchange contracts

Once you’ve got your mortgage in place, it’s time to exchange contracts with the seller or developer. Your conveyancing solicitor will help you with this process. At this stage you’ll also be given a completion day which indicates when you can move in. If you’d like help purchasing a property, get in touch with the team at TaylorMade. We can help you from the initial mortgage application stage right through to the exchange of contracts and completion of the sale. We’ll oversee the entire process, guiding you through each step while also saving you time and money.
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