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How the Application Works
Mortgages

Applying for a mortgage and buying a home, especially if you are a first time buyer is a very stressful event in anyone’s life. Knowing what to expect and having the right professional people help you through the process can not only make things a lot easier, but will most probably ensure that you find the home that you want at the price that you can afford. A mortgage application involves several steps and takes on average about two months to complete (this depends on various external factors within the process, so this guide time should only be taken as a rough estimate).

The amount you will be able to borrow is determined mainly by your income and your expenditure. The process for determining this amount varies from lender to lender, but normally you can borrow between 3 and 5 times your income on a single application, and 2 and 4 times your income on a joint application. It is possible to ad up to four applicants on one mortgage. Other factors that can affect your success are your residential status and the amount of deposit you have available to put down. Affordability has become a major measurement tool for banks in determining whether you will qualify for a mortgage and how much they will lend to you. Your credit record also plays a significant role in the success of your application and which mortgage product you will qualify for. Where possible, manage and protect your credit record at all times as it is a valuable asset.

From here on in the process will mainly be handled by your advisor and solicitor and you will only be required to provide various documents like payslips and proof of identity. The bank will instruct a valuer to do a valuation of the property; this is to ensure that you do not pay too much for it and there are no major defects that will affect the value of the asset. There are three levels of valuations and you will have to choose a particular level upon completing of the mortgage application. Your advisor will discuss this with you in detail. If the valuation report is satisfactory and the bank is satisfied with the proof of your income, it will issue a final mortgage offer. The mortgage offer sets out all the terms and conditions in relation to the mortgage and is a final acknowledgement from the bank that it is willing to provide you with a loan to buy the property.

You will be expected to pay the deposit on the date of exchange. Stamp duty and the remainder of the Solicitors Fees will fall due on the date of completion. Exchange occurs when all the outstanding requirements’ are met and both parties’ solicitors are satisfied to exchange contracts. Exchange is the physical exchange of contracts by both the seller and buyers’ solicitor’s. At this stage you will also be expected by your solicitor to provide proof of buildings insurance if you are buying a freehold property and any life insurance taken out to cover the outstanding debt will have to be placed on risk. After exchange you are not yet the owner of the property, but bound to a legal contract to complete on the date set out before exchange. The date of exchange is usually a few days before completion when you will receive they keys and you can move in.

The Application Process

The diagram below shows the steps involved in the mortgage process. Hold your mouse over each box to see a more detailed description.

Application Process