Whether you are a first-time buyer, looking to remortgage your home or other property or seeking to find a buy-to-let property, then you will be faced with tackling the mortgage application process.
In this article, we are explaining to you the mortgage application process and how a Mortgage Broker can help you save time and money.
Step 1: Contact a specialist mortgage advisor
If you want to have access to the whole or a very big proportion of the mortgage market and you wish to save time, save money and have your questions answered quickly and tailored to your situation, then finding a specialist mortgage broker is far more beneficial than going along to your high street bank or doing the research yourself.
A good mortgage broker will take time to understand your individual circumstances and will then recommend a mortgage deal to suit you. He or she will only recommend a mortgage lender and a specific product of that mortgage lender when he or she knows that there Iis a high likelihood that you will meet all of their lending criteria, including all that small print stuff that invariably most people never read.
Your mortgage broker will make ONE application for you as applications can leave a footprint on your credit file.
In the alternative, you could do that yourself, slowly and potentially painfully. Contact each lender that you know, (which means you miss out on the ones that you do not know), then see what their lending criteria are and see if you meet those criteria and then having sifted through all that information, make your application to the most suitable lender.
You may then make an application and if you missed some obscure criteria that means you fail the application, a footprint may have been left on your credit file and that could cause you issues on your subsequent applications.
Step 2: Obtaining a Decision In Principle
After your borrowing potential has been assessed by the lender, if successful, you will be provided with a “decision in principle” or a “mortgage in principle” or an “agreement in principle” document.
This document does not mean that you have been granted a mortgage, but it is a statement confirming that a lender is willing to advance (lend) to you a certain sum of money based on the information that you have submitted but still subject to the checking and accepting the relevant paperwork, proof of earnings, proof of ID and an independent property valuation. At this stage, the lender is likely to do a hard credit check.
Once you have this document you are in a great position to make an offer on your chosen property.
Step 3: Your mortgage application
Once you find a property, and when your offer is accepted by the seller, you can start to make your formal mortgage application. Your specialist mortgage advisor will manage the whole process for you and should assist in completing the application on your behalf.
A hard credit check at this stage is likely to show up on your credit file and your personal information assessed in more detail.
Step 4: Valuing the property
A valuation of your chosen property is usually carried out by a surveyor that will be instructed by the lender. The reason for this is to check that the property is a good risk for the lender it is not a survey of the property and usually it does not highlight any defects in the property that you may wish to know about.
The aim of that valuation for the lender is to ensure that if you failed to pay your mortgage, the lender can then in possession of an asset that will repay your debt to them. It is protecting the lender from being left in a detrimental position if they needed to sell it.
Depending on the outcome of the property valuation, your loan to value mortgage ratio could possibly increase or decrease. This may impact the specific mortgage product that you applied for. For example, you want to purchase a property for £100,000 and put down a 10% deposit as the mortgage product is for a 90% loan to value property.
If the mortgage valuation was only £95,000, they would lend you only 90% of £95,000 (i.e. £85,500) and therefore to purchase the property you would need to put down not 10% of £100,000 (i.e. £10,000) but instead £14,500 (£100,000 less 90% of £95,000 i.e. £85,500).
Whilst this is all going on, your lender will also be checking the information you have submitted via your specialist mortgage advisor is correct.
Step 5: Getting your official mortgage offer
If everything is in order and no problems surface during the valuation then you should receive a formal mortgage offer. If you accept the offer then you need to instruct a solicitor to act on your behalf and undertake the conveyancing process for you.
If you and the seller are happy, the solicitor will then manage the proceedings from here. Once contracts are exchanged and there is a completion date in place, the property will be yours to own!
Top Tip: Contact Your Mortgage Broker 3 Months Before Your Special Deal Expires
As the mortgage deal nears its end, contact your specialist mortgage broker to allow them enough time to source a suitable further mortgage deal for you. That way you can get the best service, and better access to a seamless transition from one deal to another special deal.
The information provided in this article is not intended to constitute professional advice and neither is it a recommendation. You should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE.
For expert mortgage advice for first-time buyers, contact us now.
Shak Inayat | 073 76 76 73 44
Penn Financial | 0333 34 44 34 8