Mortgage guide – how to avoid the pitfalls

From preparing to enter the mortgage maze to receiving the mortgage offer that helps you purchase your dream home, our simple, 10-step jargon-free guide will help you take the right turns and ensure a stress-free and smooth mortgage process.

Get your documentation in order

If your documents are in order from day one it can really speed up the process, lenders are looking for your last three years’ address history, (no gaps), payslips and last P60 or three years accounts, your last three months bank statements and full details of any loans or credit cards.

Are you creditworthy?

We can carry out a credit check for you, or you can go on-line and some companies will offer you a check for free or a free trial of their services. For tips on being credit worthy see here.

Choose who to work with

Research the different ways of finding a mortgage lender yourself however if you want professional advice, it is best to speak to a professional mortgage broker such as Coreco and we’ll do the hard work for you!

Secure an Agreement in Principle

To make sure you have the best chance of securing a home you make an offer on, we suggest that you secure a mortgage Agreement in Principle (AIP). This will confirm in writing how much a lender will be prepared to lend you, subject to them checking the information provided. This AIP can then be used to confirm to the vendor your creditworthiness and that you are a serious buyer.

The Full Mortgage Application

Lenders will want full details of your employment or business, your existing loans or credit cards, bank account details and of course full details of the property you wish to buy. This is the first stage that any money is actually spent, as some lenders will also take a non-refundable “administration” fee at this point and will want payment for the valuation fee as well.

Underwriting

Firstly, the lender will check all the documentation you have sent them (pay slips, bank statements, accounts, etc.), and they may also find some further information that they want clarification on. If your preparation has been right, however, this stage can be very quick. Secondly, they will need to carry out their own valuation on the property (which you will have paid for!), which will look at the overall condition and marketability of the property and then produce a valuation figure.

The Mortgage Offer

Once underwriting has been successfully completed, finances checked and the valuation figure is acceptable, the lender will produce a full Mortgage Offer which will be sent to both you and your solicitors. This will detail the amount to be loaned, the full monthly payments and terms of the loan. It will also detail any special conditions that need to be met by you and/or your solicitor.

Protection

Once the property is yours, it is very important that you consider whether you will be able to keep your home should anything unfortunate happen. Life cover should be considered and written in trust and you will need to arrange buildings and contents insurance ready for exchange.

Solicitors

Once the solicitor receives the full mortgage offer they will complete a “Report on Title”. This will include looking at Local Authority Reports, checking that the lease is all in order for leasehold properties and answering any specific questions the lender may have raised. Once complete this is then sent to the lender to review.

Exchange and completion

Once all parties, lender, solicitor and vendor, are happy an exchange and completion date is set. Exchange is the first date after which neither the buyer or seller can pull out of the transaction without large financial costs. In other words, the property is yours, while the completion date is when you actually receive the keys and start moving those boxes. At this point, don’t forget to enjoy a nice glass of something cold and sparkling.

Timings

Dependent on the work required by the solicitor after this point a whole transaction from beginning to end averages around 4 to 6 weeks. The more efficiently presented a mortgage application is, with the full documents required prepared in advance, the quicker this process can be- even 7 days with an efficient broker.

Some lenders do move slower than others, especially if they have the very lowest rates and are busy. Timings should be taken into account when deciding on which lender to proceed with. Sometimes taking a slightly higher rate to meet the required deadlines will make all the difference in securing your dream home.

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