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Mortgage guide – how to avoid the pitfalls

29.10.15

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
    Preparing for a mortgage starts early so make sure your documentation is in order. Lenders like to see your last three years address history, (no gaps), your last three months payslips and last P60 or three years accounts, your last three months bank statements and full details of any loans or credit cards you have. Providing this information on day one can speed up the process no end.

 

  • Are you creditworthy?
    All lenders want to make sure they are lending money to someone who is highly likely to pay it back. We can carry out this 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. Simple things like paying all your credit cards on time and making sure you are on the voters roll at your current address will help.

 

  • Choose who to work with
    Research the different ways of finding a mortgage lender yourself by visiting your bank or building society or visiting on-line comparison websites. If you want proper advice though you are best off speaking to an Professional Mortgage Broker such as Coreco and we’ll do the 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
    This can be the most time consuming part and some lender’s applications can be very detailed. 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
    This is the most frustrating part as the timing of this varies from lender to lender! 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
    The mortgage offer is not the only thing you should be concerned with. 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, whilst ways of protecting yourself and your family should you suffer an illness, become unable to work or made redundant should be taken into account. You will also need to arrange buildings and contents insurance to protect the property and your possessions 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 there are no hidden mine shafts or a runway planned in the garden!), 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

Application to Mortgage Offer times vary dependent on how busy the lender is and the complexity of the deal, but as a rough guide at least 2 to 3 weeks should be allowed. 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. It is not uncommon nowadays for applications to move to offer within 7 days, especially with the help of an efficient Mortgage 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.