So, you’ve found your dream home that’s in your budget and had an offer accepted – exciting stuff! You’ll likely already have a decision in principle handy, but the mortgage application is the next big step towards securing your new house.
This is the biggest loan most people will take out in their lifetime, so mortgage lenders want to make sure you’re a safe bet when it comes to repaying the loan. Depending on your preparation and some external factors, it could take anything from days to months before the application is approved.
Thankfully, there are ways to prepare so you can make sure your application goes ahead smoothly. What this looks like is different from person to person, so take a look at our tips below to make the process as stress-free as possible.
What is a mortgage application?
If you’re buying a property, chances are you’ll need a loan to do it – this is where mortgages come in.
You can take out a mortgage for usually a maximum of 4.5 times your income. A mortgage is typically for 25 years, though options for much longer terms have recently come onto the market. You’ll also have to consider the type of mortgage, and which repayment plan works best for you. Most go for a full repayment each month, whereas a buy-to-let investor looking to sell the property later may opt for an interest-only mortgage.
A mortgage offer from start to finish often takes around four weeks. This can vary depending on how busy the lender is, the time of year, or if your application isn’t standard.
What steps are involved in a mortgage application?
Applying for a mortgage might seem like a daunting thing, but the process is often simple.
Once you’ve sent over your proof of identity and address, your latest bank statements and proof of your employment, the mortgage lender will have a look over everything you’ve supplied to check everything matches up.
They’ll also look at your credit record, which will leave a mark on your credit file for six months. If you’re rejected at this stage, it’s not recommended to apply for another mortgage in a short space of time to further impact your credit score.
While the checks are going on, the lender will order a survey to be done on the property. This is to assess whether it’s worth what the seller and estate agent have said it is. These are usually ordered quickly to avoid any delays on the lender’s side in issuing you a decision.
Once all the above is completed and the lender is happy – you have a mortgage offer! It’s usually valid for three to six months, depending on the lender.
How to speed up the mortgage application process
You can do some prep work before you even fill out the mortgage application to keep things speeding along. Make sure your IDs are up to date and you have bills going out in your legal name – both will be needed for identification checks from the lender.
Check through your bank statements from the last few months and make sure there are no anomalies there – if something doesn’t look right, get it cleared up with your bank ahead of time. This is especially important if you’re self-employed or have just gotten a new job.
Pay off any credit cards well in advance to show lenders you can make regular repayments and make sure to avoid any big purchases beforehand, like a car or personal loan, as this could affect how much the lender offers you.
If you’re borrowing money from a family member or friend to make up part of your deposit, make sure to declare the money as a gift to your mortgage lender. Mortgage lenders will want a signed declaration form to show the money is a gift rather than a loan, so nobody else has a potential claim to the house other than the person named on the mortgage.
This also has potentially costly tax implications. If that family member or friend passes away before seven years have passed, you may have to pay inheritance tax on the gift depending on the size of their estate – so lenders like to know exactly where your deposit has come from.
Something to keep in mind is that lenders want certainty and to make sure you can afford your monthly repayments, so don’t give them any reason to doubt that you’re a responsible person to lend to.
If you’re feeling stuck, working with a mortgage broker may also help speed up the process of applying for a mortgage and take away some of the stress of the application. If all goes well, these experts can get mortgage offers through within a week from start to finish.
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