6 steps to securing a mortgage
Purchasing a house can be one of life’s greatest achievements. Securing a mortgage, however, can prove stressful, confusing and time consuming if you don’t have the right guidance.
At Cooper Associates Mortgages we’ve put together a guide which outlines the typical steps required to secure a mortgage. Our knowledge and experience, combined with our drive to treat every client as our only client, means we have been able to help thousands of our clients on their property journey.
We need to understand you and your financial situation, to help establish your property-related goals. As a result, we will need to determine answers to the following questions, some of which you may not have considered yourself yet:
- What is your income every month? What are your outgoings?
Lenders assess borrowing based on your affordability. To assess your affordability a lender will assess what you have coming in every month, the expenditure you have going out every month and importantly, your disposable income after this. Lenders will stress test your potential borrowing assuming interest rates will rise in the future and to ensure that you could still maintain the required mortgage at their stress test rate. As such, it is imperative we have a thorough understanding of your monthly finances.
Lenders usually also apply an income cap to borrowing. This is typically no more than five times your annual income.
- What is your monthly budget for your mortgage payment?
Your monthly budget will determine the term of the mortgage we arrange. The mortgage term must also be affordable in the lender’s eyes. A term too short could lead to financial difficultly should your circumstances change. A term too long can lead to you paying unnecessary interest.
- Do you prefer to have a lower mortgage rate which moves up and down in line with the Bank of England base rate, or the comfort of a fixed rate, where you know what your outgoings will be for the mortgage term?
There are a huge variety of mortgage products available, from fixed rate and trackers, through to more complex repayment options.
As well as the above, we will seek clarification on your type of employment, payment structure and any pension provisions or benefits, to fully understand your financial situation. Our Advisers are always prepared to discuss these with you at length, guiding you and educating you on the various factors that will eventually help you achieve home ownership.
At the end of your initial appointment, and subject to all information supplied by you being accurate along with a satisfactory credit score, your adviser will be able to give you an idea of what you are able to borrow and the property values achievable for you.
You will have a sound understanding of how much you can afford to borrow, and therefore what type of property you can afford. As such, you are now able to start looking for your property. During this process, your adviser is on hand to guide you through any concerns or queries you have, whether this be an unusual property or what it might cost should you change the borrowing amount you require.
Should your offer be accepted by the property vendor, we will begin the mortgage application process.
We have all the information required for a mortgage application from our first appointment with you. Now we can begin sourcing the most suitable mortgage specifically for you and your needs.
We are a whole of market broker, with access to a wide range of lenders based on 1st charge lending. We regularly have access to exclusive and semi-exclusive products, having built excellent long-lasting relationships with lenders from across the market. This combination is what enables us to deliver the most competitive rate and bespoke product tailored to your individual mortgage requirements.
Once we have established the best product for you, we produce a Key Facts Illustration from the lender, detailing the prosed terms of your mortgage contract. At this stage we arrange to see you again to go through this document and answer any questions you may have.
Following our second appointment, and our discussions regarding your proposed mortgage product, we will then perform a ‘decision in principle’ with your mortgage lender. This will include running a credit check to ensure the lender is happy to finance your purchase. A credit check is essentially a search on your finances so the bank can understand your financial behaviour, giving the mortgage provider assurance that you are a worthy investment. Some lenders allow us to do a ‘soft check’, which doesn’t leave an imprint on your credit file.
If approved, you will receive a document confirming that the mortgage provider is prepared to lend you the money – typically referred to as a Decision In Principle – subject to you providing the relevant documentation to support your application.
Following a successful credit check, a formal mortgage application will be made to your mortgage lender. At this point, the lender will likely request evidence of your earnings and your bank statements. Whilst the lender is underwriting your application, and ensuring the information supplied is accurate, they will also instruct the valuation of your property. This provides the lender with the security that the property is worth the amount you are purchasing it for. A lender will instruct a basic mortgage valuation, which is for their information purposes only. More comprehensive valuations, such as a Homebuyer’s report or a full structural survey, can be performed at your request. Your adviser will have detailed these in your second appointment and advised as to whether you need one or not.
Following the satisfactory underwriting of your application and the satisfactory survey of your property, the lender will issue a formal mortgage offer to you. The mortgage offer will be sent to you, your solicitor and Mortgage Adviser, whereby all three parties need to approve the offer.
During the entire application process, your Adviser and Client Relationship Manager will be in regular dialogue with you, the lender, the solicitor and your estate agent, to ensure the process is as smooth and stress free as it should be.
Provided all parties are satisfied with the offer, the conveyancing solicitor moves the transaction through to exchange and completion. Upon completion you will receive the keys to your new home.
How we can help you
While this provides you with an overview of the steps involved in securing a mortgage, no case is ever the same and every mortgage application is dependent on you, your financial situation and what you are trying to achieve in purchasing a property. Complexities can arise but having a Mortgage Adviser to guide you throughout the process can help you enjoy as smooth a journey as possible to home ownership.
If you are considering benefiting from our Mortgage Advice service then please do not hesitate to call Cooper Associates Mortgages for a fee-free, no obligation conversation. Call 01823 273880 or complete an enquiry form and we will contact you as soon as possible.