As Featured In

The Beginner’s Guide to the Mortgage Application Process

Eager to get onto the property ladder by buying your first property? The thought of buying your first home can be daunting, that’s why we’ve put together this guide. In this blog post, we’ll explain all the different stages of the mortgage application process from beginning to end. We’ll also explain all the terminology in use along with the main considerations. Don’t forget, if you need any help, our friendly mortgage team is here for you.

There are eight main stages to the mortgage application process:

1. Pre-mortgage stage

What is my budget?

So you want to buy a property, but can you afford it? There are numerous mortgage calculators online that can give you a rough idea of what you might be able to borrow. As a guide, you can usually borrow around 4.5 – 5.5 times your income depending on the lender and your circumstances. It’s sometimes possible to borrow more, especially if you work in a profession. Professional mortgages often offer more generous terms for those who qualify. Speak to our mortgage team to find out if you qualify.

Another key consideration when it comes to buying property is that there are other costs to budget for.

These include:
– stamp duty tax (if over the threshold)
– solicitor fees
– mortgage fees
– mortgage advice fees
– property survey fees
– moving costs

It’s therefore worth setting aside separate funds to cover these additional costs.

How much deposit do I need?

The size of the deposit required depends on the value of the property but most lenders will require a minimum deposit of 5-10%. If you can save more, this will reduce your monthly payments and so is worth considering. It’s also worth noting that the higher your deposit, the more competitive your mortgage rate will be. This is because you will have access to more lenders and more mortgage deals.

What else can I do to prepare for the mortgage application process?

There are a few things you can do before starting a mortgage application to boost your mortgage chances and prepare for the mortgage application process:

– Gather all your paperwork together and make sure your identification documents are all up-to-date.
– Check you are registered on the electoral roll
– Make sure your existing credit and bank accounts have your correct address
– Minimise spending in the lead-up to your mortgage application and reduce overdraft usage
– Repay or reduce debts where possible (but take advice from us first)
– Don’t take out any credit before a new application
– Avoid taking out payday loans

By taking the above steps, you can ensure that you are ‘mortgage-ready’.

2. Find a mortgage

Should I work with a broker?

When applying for a mortgage you have two options. Find a mortgage yourself and deal with the lender directly or use a mortgage broker. As the mortgage process can be complex, we highly recommend using a mortgage broker for your mortgage application to ensure the process goes smoothly.

At Simple Fast Mortgage, our team has over 20 years of experience and we have extensive connections to lenders in the mortgage market. This means we can help you find the right mortgage based on your personal circumstances. With our experience, we’ll ensure that the mortgage process is as stress-free as possible by liaising directly with the lender on your behalf. Our team is also not restricted so you can be sure any recommendations we make have your best interests at heart.

Interest only vs repayment

One of the options you may have is whether your mortgage will be on an interest only or repayment basis. With an interest only mortgage, you make monthly payments to repay the interest but only repay the principal sum (capital) borrowed at the end of the mortgage term. You’ll therefore need to have a payment plan in place at the end of the mortgage to repay the original mortgage balance. In comparison, with a repayment mortgage, your monthly payments pay the interest and the capital. In this way, a repayment mortgage is repaid by the end of the mortgage term. Interest only mortgages are not available to everyone, so it’s important we assess your situation and advise on what’s best for you.

Fixed vs variable rate mortgages

Another decision you’ll need to make is whether you choose a fixed or variable-rate mortgage deal. A fixed-rate mortgage deal offers you a fixed rate of interest so your monthly mortgage payments remain fixed for the duration of the deal. Alternatively, a variable interest rate usually tracks above or below another rate such as the lender’s internally set interest rate (SVR – Standard Variable Rate) or the Bank of England base rate.

Generally speaking most first time buyers will have a fixed rate mortgage as this enables them to budget their spending appropriately.

For more information on mortgage deals see our separate guide which delves deeper into fixed rate and variable rate mortgages 

3. Apply for an AIP or DIP

Do I need a credit search?

You’ll usually need an AIP (Agreement in Principle) or DIP (Decision in Principle). An AIP and DIP are the same thing but each lender uses different terms.  An AIP is a snapshot of your circumstances for the lender to review to decide if they want to give you a mortgage. They’ll also confirm how much they are willing to lend.
As part of the process, they’ll also carry out a credit search. The credit check is usually ‘soft’ which means it doesn’t affect your credit profile, but beware of lenders that still conduct a hard credit check which can affect your credit score. This will confirm your address, review how much credit you have and they’ll check your credit history. The lender will look for missed payments and any adverse such as CCJs or defaults. Be sure to be upfront with your broker and lender if you have had credit issues in the past. You can also request your own copy of your credit file from Check My File.

Whether you need to have a DIP or AIP before you find a property will depend on your individual situation. For example, if you have a good financial situation and are looking for a borrowing amount which is easily within your affordability, an AIP might not be necessary until you find a property. If you are maximising your borrowing, or have other elements to consider such as past credit blips then it may be worthwhile to have an AIP now. Most of the time you will need an AIP in order to have an offer accepted on a property so it can be good to have one in either situation so that the property can be removed from the market quickly to avoid someone else putting an offer in! A mortgage adviser will assess your situation and let you know the next steps

4. Submit a formal mortgage application

What documentation do I need to supply?

Once you get approval for your AIP, you’ll be able to proceed to a full mortgage application. At this stage, the lender will request certain documentation to verify your income and identity. Exactly what you’ll need to supply depends on the nature of your employment and if you pass an electronic ID check, as well as the specific mortgage lenders process. Employed applicants will normally need to provide payslips, latest P60 and bank statements. Self-employed applicants will usually need to provide tax calculations or financial accounts and possibly business and personal bank statements. If you work with us, we will request all these documents up front and check them thoroughly. This is so that we can be really confident that there should be no nasty surprises later down the line. Not all mortgage brokers work in this way, beware of getting mortgage quotes without providing documents first as you may not be eligible for those products.

The valuation

As well as verifying your information, the lender will also instruct a valuation as part of the mortgage application process. This valuation is just for the mortgage lender to get comfortable they can get their money back if you don’t pay the mortgage. If you are buying an older property or need peace of mind then it’s worth getting your own property survey.  The valuation is a survey of the property you are buying which confirms the property’s condition and value. The valuation will also look at other property details such as the number of rooms, location, and construction type to ensure they are acceptable to the lender. Lenders have their own individual criteria as to what properties they will accept. If you do have concerns with the type of property you are buying or its condition please speak to our expert team when applying.

5. Receive the mortgage offer

How long does it take to get a mortgage offer?

The mortgage application process can take a few days to a few weeks but you can usually expect to get your mortgage offer within 4 weeks of applying. The individual lender’s processing times, the complexity of your mortgage application and any issues or delays with the valuation are all factors in getting your offer. Some lenders are quicker than others so if you need a quick turnaround time this should be taken into consideration when choosing a lender.

How long is my mortgage offer valid for?

Once the valuation has come back and the lender has verified your details, you’ll normally receive your mortgage offer. This confirms the details of your mortgage and is typically valid for 6 months (depending on the lender). You’ll then need to ‘complete’ the mortgage by the end of the validity period or risk losing your current deal and having to apply for another mortgage and potentially a new valuation.

6. Solicitor Searches

What does a conveyancer or solicitor do?

Once you have your mortgage offer, you’ll be able to instruct a solicitor (if you haven’t already done so). The solicitor (or conveyancer) will then carry out various tasks including local searches to ensure there is nothing you need to be aware of. The solicitor also handles all the legal work including the transfer of the property ownership into your name at completion. They will also liaise directly with the vendor’s solicitors and handle communication with them. This process usually takes around 8 weeks but can be quicker if you use a responsive solicitor and have your ducks in a row in advance. We can help with this.

7. Exchange of contracts

Now that the legal searches are complete, you can exchange contracts. This effectively makes the transaction legally binding so once you exchange there is no going back unless you want to face penalties. Your solicitor will arrange to exchange contracts with the vendor and this is also the point where you will pay the deposit and set a date for completion.

8. Completion

Completion is the final stage of the mortgage process. This is when you get the keys! It’s when the lender releases the mortgage funds to the solicitor who then transfers them to the vendor’s solicitor. The solicitor finalises the transfer of ownership paper and the transaction is complete. You can collect your keys and move into your property.

Ready to start your mortgage application? Contact our friendly mortgage team on 0333 090 2025 or use our online form.

Open chat
Hi, let me know in as much detail as possible how we can help?
Seraphinite AcceleratorOptimized by Seraphinite Accelerator
Turns on site high speed to be attractive for people and search engines.