Applying for a mortgage can be a fairly daunting process, especially if you are a first time buyer. Whilst a mortgage broker can help to alleviate some of the stress by handling matters on your behalf, it’s only natural to want to feel as though you still have control. By understanding exactly how the mortgage process works, you can feel like you have some of the control. Let’s take a look at how the process works when using a mortgage broker.
In the first instance, your mortgage broker will spend some time understanding your financial circumstances and what your requirements are. For example, they will need to know your annual income, how much you need to borrow, whether you have had any credit issues, what repayment type you prefer, whether you would like a mortgage with added incentives (such as cashback) and various other important factors. Once this has been established, your broker will assess your situation, look over your requirements and then make a recommendation based on those facts. You need to be confident that the recommendation is suitable for you. This is why it is crucial for mortgage brokers to continually educate themselves about the different criteria requirements for each lender and the different products available on the market.
If you decide to proceed, your broker will ask you to provide some documents. Again, the documentary requirements can vary from lender to lender but generally speaking, you will need to provide proof of your identification, proof of your residential address, proof of your income and bank statements. Your broker will review your documents to ensure the right recommendation has been made to you and then apply for a decision in principle (DIP) – sometimes known as an agreement in principle – with the chosen lender. If you get a DIP agreed, the lender is essentially saying that pending satisfactory paperwork, credit checks and valuation, it is likely they will lend to you.
This is when your broker will formally apply for your mortgage. The application will be submitted and your supporting documents will be sent to the lender for assessment. Since the recent Mortgage Market Review, lenders are required to be extra stringent when considering whether a mortgage is affordable for the Applicant(s). Your total household income will now be determined by how much you earn against how many regular outgoings you have. If you have loans, credit card debt or childcare costs, this debt will be deducted from your income. If you are thinking of applying for a mortgage, it is worth spending a few months ‘tidying up’ your finances and cutting back on non-essential spending.
Having carried out the initial checks, the lender will instruct the valuation. On some occasions the valuation will not be instructed immediately. With some lenders, the case will be fully underwritten prior to the valuation being instructed – this means all of the documents will be checked and signed off (if further documents are necessary these will be requested), all of the credit checks will be completed and the lender will give approval for the mortgage to proceed subject to a satisfactory valuation. However, some lenders will carry out the full assessment while they are waiting for the valuation report.
Once the lender has received a satisfactory valuation report and the mortgage has been fully underwritten, the case will be sent for some final checks to be carried out. This will include a further credit check and fraud checks. A formal offer will then be issued to you, your solicitor and also the broker.
Your solicitor, known as a conveyancer, will finalise the legal aspect of your mortgage. Once searches are complete and all enquiries are satisfied, the conveyancer will contact you to arrange for you to sign the contracts for exchange and agree a completion date. Once the exchange of contracts is complete, you are legally bound to proceed. It is at this point you will be asked to forward your deposit monies (if you have not already done so).
Your conveyancer will request the funds from the lender and your mortgage will be complete! Congratulations!
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE