Basics of Making Mortgage Application
After estimating the mortgage amount you want to borrow and have identified your preferred lender, there are key steps to follow to get a mortgage. The procedures are the same whether you want to apply for a mortgage for the first time or want to go for a new lender.
An approval or agreement in principle or the lender or mortgage adviser will set out what you will probably get as mortgage amount based on certain terms and conditions. This can be helpful when you have chosen your mortgage and are ready to make an offer on a property. It is important that you do not overstate your income. This may lead you to borrow excess amount beyond your repayment ability.
You may need legal or expert advice to undertake important activities such as local searches, drawing up contracts and other legal paperwork. It is recommended to use a conveyancing solicitor or a licensed conveyancer if you are not comfortable with such procedures. Lenders may be able to identify a preferred solicitor, or you may be able to get a personal recommendation. You can also search online or in the phone book. In most cases the mortgage provider will insist on a professional conveyancer to undertake the valuation of the property you are planning to put up as collateral.
You will have to make a full mortgage application by completing and returning the lender’s form. The lenders will usually also want to see evidence of your income, your identity, your current address and or sometimes a previous lender or landlord’s reference. They may also want a non-refundable fee to cover their costs and perhaps to pay for a valuation. If you can not prove you have got a regular income due to reasons such are you are self-employed and do not have enough proof, you may be able to get a self-certification mortgage. This usually requires a larger deposit and the lender may still want some evidence of your ability to pay.
Your lender may get written references from your employer and bank or accountant if you are self-employed, and your current lender or landlord. They will also run credit checks to make sure you have paid off your debts in the past. Your lender will usually have the property valued to make sure it’s worth the price you’ve agreed to pay. If it is not, it could affect how much they will lend you. It is advisable to get your own survey done too or to upgrade the lender’s valuation survey to a more detailed one.
If the lender is happy with the valuation and references, you will be made a formal offer - usually sent to you and your solicitor. Once you or your solicitor on your behalf have signed and returned the offer documents, your lender is committed to providing the money. The mortgage offer usually requires you to take out buildings insurance, in case something happens to the property before you have paid off the mortgage.
If you are buying, once you’ve got a formal mortgage offer, your solicitor can agree a date for exchanging contracts with the seller’s solicitor. At this time you usually pay a percentage of the purchase price as a non-refundable deposit and commit to paying the rest on the agreed completion date when the property becomes yours. You may be able to apply for your mortgage and track its progress online. In Scotland, you usually have to arrange your mortgage before you make an offer on a property.
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