How to apply for a mortgage: the process explained step by step

  • We earn a commission for products purchased through certain links in this article.

  • If you don’t know how to apply for a mortgage, it can seem like a daunting task. It is, after all, one of the biggest investments you are likely to make, without any experience – if this is your first time! But we’re here to reassure you, it doesn’t have to be stressful. If you know what to expect and prepare ahead of time, you’ll navigate the process easily.

    We outline the key steps in the mortgage application process, so you know what to expect.

    How to apply for a mortgage – the step by step guide

    Image credit: Future PLC/ David Giles

    1. Prepare your mortgage

    To improve your chances of getting the lowest mortgage rate and highest loan amount, put away your bank statements and credit report before you apply.

    “One tip for new buyers is to make sure you’re on the voters roll,” says Rachel Dixon, mortgage advisor at RH Dixon. “Lenders want to see where you’ve lived and what credit you’ve had in the past before making a decision” You can register online to vote.

    “Late or missed payments will hurt your credit score and affect the mortgage rate you’re offered,” says Rachel. ‘Pay your bills on time by setting up direct debits for your commitments.’

    Manage a small amount of credit to show lenders that you are good with money.

    To improve your credit score for a mortgage Try not to use your overdraft or exceed the pre-agreed limit before your mortgage application. Looks like you’re living beyond your means.

    2. Calculate your purchasing power

    To find out how much you can borrow, complete an online budget planner or ask a mortgage broker to do it for you.

    You will be asked for your:

    • Average annual salary or profit
    • Monthly debts
    • Cost of utilities, transportation, food, and socializing
    • Other regular commitments

    A budget planner gives you an estimate of your maximum loan. You can ask a lender for a more specific mortgage offer by requesting an Agreement in Principle (AIP). Your credit will be checked before getting a response.

    David Hollingworth of L&C Mortgages says: “An AIP demonstrates to the seller and estate agent that you are a serious buyer and can provide security for those who have had credit problems in the past and are concerned that they will not succeed. a lender’s credit rating. ‘

    The loan amount on the PRA is unsecured. Try our mortgage calculator to see how much you could borrow.

    3. Gather your supporting documents

    Now that you know how much you can spend, it’s time to look for a house. You can gather the documents you will need for your application at the same time.

    You will need:

    • Payslips for the last three months
    • P60
    • Bank statements for the last three months
    • ID, usually a passport or driver’s license
    • Savings proof for your deposit
    • Accounts for the last two years / SA302 forms and tax overviews if self-employed
    home office with green walls and a white desk chair and shelves

    Image credit: Future Publishing Plc/Paul Raeside

    4. Choose the right mortgage offer

    Aaron Strutt of mortgage broker Trinity Financial says a key decision for borrowers is choosing a deal that offers security or flexibility.

    “If borrowers choose a fixed rate, they know how much their mortgage payments will be for a fixed term,” he explains. “But many do not consider the heavy penalties they face if they sell or mortgage before the end of the fixed term.

    “Or you can choose a tracker mortgage that goes up and down in line with the Bank of England base rate. Although the interest rate fluctuates, there is no penalty for exiting early.

    5. Submit a complete application

    Once the seller has accepted your offer, it’s time to apply for your mortgage.

    You will need to provide a few additional details to your lender at this stage, such as the purchase price and the address of the property. Specify the amount you want to borrow, the value of your deposit and where it comes from, such as your own savings or a gift from parents.

    You’ll also need to give your solicitor’s contact details, so if you don’t already have one, it’s time to hire a firm to act for you.

    The lender will have a surveyor appraise the property to make sure it is worth what you are willing to pay.

    6. Accept your mortgage offer

    Once the lender is satisfied with all the information provided, you will receive an official mortgage offer. This is valid for three to six months.

    Once the legal work is done, your lawyer will ask the lender to send you the funds for your mortgage. Your mortgage as well as your deposit are transferred to the seller’s lawyer before the property becomes legally yours.

    Ways to Apply for a Mortgage

    If you like managing your finances online, you can apply for your mortgage on the Internet. Habito, Trussle and Mojo Mortgages are the best known online brokers.

    The in-person appointment is replaced by an online application form and mortgage offers from all mortgage lenders will be offered to you based on a computer algorithm.

    Or you can make an appointment with a traditional mortgage broker over the phone or in person. They can search the entire market for the best deal.

    If you prefer to deal with your own bank, talk to the mortgage adviser at your local branch. They will only be able to recommend the bank’s mortgage offers.


    About Author

    Comments are closed.