Whether you’re a first-time homebuyer or refinancing an existing loan, the process of applying for a mortgage can turn out to be a complicated process. To help you out, keep reading to know more about the timeline of a typical UK mortgage application process.
The Mortgage Application Process
Whether you're a first-time homebuyer or refinancing an existing loan, the process of applying for a mortgage can be lengthy. Here’s what you need to know about the mortgage approval process:
1. Get a Mortgage in Principle (1-3 days)
Obtaining a mortgage in principle is an integral part of the home-buying process. This is essentially a statement from a lender, expressing their belief that they can lend you the necessary funds to purchase a house.
To get this agreement in principle, you need to supply some basic information about yourself to the mortgage lender, such as your income and current financial status. Based on this information, your credit score will be accessed to determine if you meet their requirements.
A great way to acquire a mortgage in principle quickly is by using an independent mortgage broker. A broker can search for the best deal for you through multiple mortgage lenders and can even arrange the application process on your behalf.
This doesn't guarantee that the lender will agree to give you the loan when it is time to purchase property but it shows potential real estate agents that you are serious about buying.
Having a mortgage in principle can be helpful when the time comes to make an offer on a property because it may speed up the process if it's with the same lender who issued the agreement in principle.
2. Find a Property: (1 - 4 weeks)
Once you have obtained a mortgage in principle, the next step is to find a property. The amount of time you'll need to find your dream home can vary depending on the type of property you are looking for and the availability of homes in your area. However, here are 5 factors to consider while searching for a home to buy:
1. Location: Consider the location you would like to live and important factors such as schools, commute times, and lifestyle requirements. Even if you’ve got an ideal neighbourhood in mind, be sure to broaden your search and explore the wider area.
2. Budget: Make sure that you have a clear budget in mind before you start looking for a property. Consider how much deposit you can put down and how much your mortgage repayments will be, compared to your other financial obligations each month.
3. Property Type: Think about what kind of property is suitable for your needs. Do you want a house or a flat? A period conversion or a new build? How many bedrooms do you need, and do any specific features matter to you?
4. Condition: While most properties can be improved with some work, it's important to think about how much renovation work you are willing to take on. If you're not a DIY enthusiast, then it is best to look for properties that are already in good condition and only require minor maintenance.
5. Personal Preferences: Don't forget to consider your own personal wants and needs when it comes to choosing a property. Do you need an outdoor space? Are you looking for a home with character or one that is modern?
Note: A mortgage in principle typically lasts for 3 months before it expires, so try to find a property within this time frame. But if you don't, you can always reapply for another mortgage in principle instead of rushing to buy a property you don't want.
3. Apply for a Mortgage (1 day)
The next step is to apply for a mortgage. A mortgage application typically requires the following documents:
Identification proof such as a driver’s license and passport
Proof of income, such as pay stubs, W2 forms, or bank statements
Credit report and score
Bank statement (3 months)
Property details including purchase price, estimated value, and address
Once you have gathered all the necessary documents, you can apply for the mortgage agreement either online or through a mortgage broker. If you choose to go through a broker, they will help guide you through the process and make sure that everything is in order before submitting your application. They will also be able to answer any questions you may have about the loan products available.
4. Get a Mortgage Valuation (1-2 weeks)
A mortgage valuation happens when the lender sends out a surveyor to inspect the property and estimate its value. The surveyor looks at the property’s condition, size, features, and more. After the inspection, they send a report to the lender that includes an estimated value of the property.
Some evaluators estimate the value of properties online or over the phone, but for larger or more complex properties, a physical inspection is necessary. Depending on the lender, this process can take anywhere between 1-2 weeks.
If you want a more detailed survey of the property, you can also get additional surveys such as:
Building Survey: This survey is more comprehensive than the mortgage valuation and goes into detail about the condition of the structure, along with any defects that may be present. It gives more information about any potential problems or repair costs that need to be taken care of before moving in.
Homebuyers Report: This survey is similar to the Full Building Survey but is tailored for properties that don't have any structural issues. It focuses more on the condition of areas such as damp proofing, electrical, and plumbing. These surveys are usually optional and come at an additional cost, but they can give you peace of mind that there are no hidden issues with the property.
5. Review the Formal Mortgage Offer (1-4 weeks)
This is probably the best part of the home-buying process! The lender review all the documents you have provided and makes a decision on how much money they are willing to lend. This process usually takes 1-4 weeks depending on the lender and other factors such as credit score.
Once the decision has been made, the lender will issue a mortgage offer with all the details regarding the loan amount, interest rate, fees, repayment terms, etc. Make sure you read over everything carefully and ask any questions you may have before preparing a mortgage contract.
6. Sign the Mortgage Contracts (1-4 weeks)
Once you have received the mortgage offer and reviewed it, the next step is to sign the mortgage deal, and exchange contracts. This is a legal agreement between you and the lender that outlines all information about the loan amount, interest rate, repayment schedule, fees, etc.
The contract also spells out any restrictions or conditions that you must follow, such as the maximum amount of money that can be borrowed and what type of property can be purchased. Make sure to read it over carefully before signing to make sure you understand all the terms and conditions.
If you're not sure how to draw up a proper mortgage contract, it's best to hire a conveyance solicitor to help. A solicitor will prepare all the legal documents necessary for the transaction and guide you through the process. He or she will also l review contracts before they are signed and make sure that everything is in order.
7. Complete the Purchase (1-7 days)
After you sign the contract, you may instantly get access to the property, or it may take a few days for everything to be finalised. Once all the paperwork is processed and completion day arrives, you will get access to your new home and can start your journey as a homeowner.
Now's the time to get your friends and family to help you with the move and unpack.
How Long Does a Mortgage Take?
The average mortgage process can take anywhere from 2 to 6 weeks depending on a variety of factors, including:
Credit Rating: Your credit score is an important factor that lenders use to determine your loan amount and interest rate. Higher credit scores can lead to lower interest rates and a faster approval process.
Results of a Mortgage Valuation Assessment: A lender order a surveyor to assess the property before granting any loan. The longer it takes for the surveyor to get back with their results, the longer the process may take overall.
Income and Affordability Review: Lenders verify your income before approving a loan. This includes confirming pay stubs, bank statements, and tax returns so they can check your financial stability. The time to process the mortgage directly depends on the time taken by the lender to approve the loan.
Size of Deposit: If you're able to put down a larger than-average deposit on the property, this could speed up the process as lenders will be more likely to approve your loan.
Other Documentation: If you need to provide additional documentation such as proof of address, employment history, or investment accounts, this can add time to the processing as well.
How Can You Speed up the Process?
Getting a mortgage can be a long and complex process, but there are some steps you can take to speed things up. Follow the tips that may help accelerate the timeline of your mortgage application:
1. Check Your Credit Report: Check your credit report to ensure that all the information is up to date and correct. This can help speed up the loan approval process so you don't have to wait while lenders check every detail of your financial history. By law, you're entitled to one free credit report each year so make sure to take advantage of that.
2. Keep in Touch: During the mortgage application process, it's important to keep in contact with your lender and provide any additional paperwork or documentation they may ask for as soon as possible. The quicker you are able to supply this information, the faster they will be able to approve your loan.
3. Gather Relevant Paperwork: Have all documents related to income, employment, assets, and debts ready before you apply for a mortgage. This will help expedite the process by providing lenders with everything they need to make an informed decision. While compiling your documents, make sure to double-check all the information for accuracy.
4. Arrange Surveys in Advance: If your mortgage lender requires a survey of the home you're buying, try to arrange it before you start the application process so that results are available sooner. This could help save time on the overall timeline. Before the survey, you may need to get a copy of the title deeds and check any local planning regulations.
5. Deliver Everything on Time: Make sure all paperwork is completed accurately and delivered to your lender in a timely manner. Delays or mistakes can slow down the process, so it's important to stay organized and focused throughout the application process.
6. Find a Chain-Free Seller: A property purchase with no chain can significantly reduce the time it takes to complete the mortgage process. This is because you won't have to wait for any other parties to complete their part of the transaction before your loan can be approved and finalized.
7. Get Mortgage Advice From a Broker: Working with an experienced broker who knows how lenders operate can help you get your loan approved faster. A good broker will know which lenders are most likely to approve your application, so they can guide you through the process quickly and efficiently.
8. Consider the Extra Costs: Make sure that you consider all of the additional costs associated with buying a home such as conveyance fees, survey charges, and more. These charges affect the overall timeline of your application.
By taking these steps into consideration, you can reduce the amount of time it takes to get a mortgage loan approved and make the process smoother and more efficient.
The Bottom Line
Getting a mortgage as a first-time buyer can be intimidating, but by understanding all of the options available to you and planning ahead, you can make the process go smoothly. Seeking advice from a mortgage broker or financial advisor can also help you save time and money throughout the entire process.
Finally, consider all of the additional costs associated with buying a home and choose a type of loan that will benefit you most in the long run. With research and preparation, you can be on your way to getting your first mortgage in no time at all.
