Mortgages: The application process

When you apply for a mortgage, you’ll need to explore mortgage types and compare lenders. Better research means you’re more likely to get a suitable mortgage deal. So use comparison websites, speak to mortgage brokers or check government-backed schemes if you’re a first-time buyer. An independent mortgage broker will be able to share mortgage products available across the market, whereas a mortgage advisor may be tied to a specific bank and will share mortgage products offered by that particular bank or building society.

Not all brokers require a fee upfront, and some broker fees can be added to the loan amount. A lender can give you a mortgage offer in principle. This is a quick indication of how much they could lend you based on a soft credit check and basic income details. A soft credit check is when a company looks at your credit report, but it doesn’t affect your credit score. Having an agreement in principle is often a good start to househunting. Although it’s not a formal mortgage offer, it can be helpful because it shows estate agents and house sellers you are a serious buyer. It also gives you a ballpark figure to guide your property search. However, it’s usually time limited, often only valid for 30 to 90 days.

When you make a full mortgage application, you will need to provide detailed documents such as payslips, ID and bank statements, often going back six months and sometimes more for people who are self-employed. The provision of bank statements is so the lender can check that you can afford repayments. Many lenders do not like to see large cash withdrawals, gambling or other unexplained large transactions on bank statements. The lender will also do a hard credit check. A hard credit check is when a lender looks closely at your full credit history because you’ve applied for credit like a loan, mortgage or credit card. Unlike a soft check, it does show up on your credit report and can affect your score for a while.

Before applying for a mortgage, you need to set a realistic budget, not only accounting for your mortgage payment, but also bills and other living costs. You’ll need to factor in all of your expenses when considering how much you can pay each month towards your mortgage. Things like childcare can have a large impact on your affordability, and lenders will factor these expenses in. It’s important to consider affordability and changes to your circumstances beyond the application process. Home maintenance such as a broken boiler could make repayments difficult. Having an emergency fund or savings separate from your deposit is important. This is also likely to be helpful with furnishing and decorating your new home.

It’s very easy to focus on your deposit without giving leeway for much else. This insight is better now than having to learn in hindsight. Try to get existing debt under control, this improves the likelihood of being accepted for your mortgage. High levels of debt mean more money is needed to service that debt, reducing the amount lenders may be willing to lend you for your mortgage. Avoid applying for other forms of new credit while your mortgage application is being processed. Any big changes in your finances, such as new loans, large unexplained bank deposits, or withdrawals during the full mortgage application period can raise red flags. So to try to keep your finances stable from agreement in principle to the completion of your house purchase. You’ll also need to ensure your credit report is in as good as shape as possible.

Don’t just focus on the credit score, but consider all aspects of the report. You can get a free copy of your credit report from a credit reference agency. Each agency provides a statutory credit report that you are legally entitled to receive free of charge. There are also websites that offer useful advice for understanding and improving your credit score. You’ll also need to ensure you have saved enough for a sufficient deposit to meet your expected mortgage conditions. Your monthly payment will depend on how much you borrow and the interest rate you secure on the deal. Therefore, having a larger deposit can bring monthly payments down. Be wary of submitting incomplete or inconsistent documents and ask questions if you don’t understand the terms or fees.

Open communication with a lender or broker can smooth out surprises. The lender will also then check the property to ensure it’s worth the loan amount. This may be a basic valuation, or it might be a more thorough survey, usually at the buyer’s expense.

It is worth noting that this is a process for the lender’s purposes and doesn’t replace your own surveys or due diligence as a buyer. For your own peace of mind, you may want to commission a structural survey, sometimes called a building survey. This is especially important if you’re buying an older property, a home with visible defects, or if you’re planning major renovations. A structural survey provides a detailed assessment of the building’s conditions and can highlight issues such as damp, roof problems or hidden structural weaknesses that could lead to costly repairs in the future. To find a surveyor, buyers typically look for a professional registered with the Royal Institution of Chartered Surveyors (RICS). You can search directly on the RICS website, ask your estate agent for recommendations or get referrals from friends, family or your solicitor. It’s wise to compare quotes and check that your chosen surveyor has experience with the type of property you’re buying.

If you’re approved, the lender will issue a formal mortgage offer. If you haven’t already, you need to appoint solicitors to handle legal aspects of buying the property. This includes searches and contract exchange, which is legally binding. You can shop around for these services, but if you can’t get a good personal recommendation, your estate agents often have firms they recommend. Some final checks on your finances might happen if there’s any delay in buying the property. This is to confirm there have been no major changes. The mortgage funds are released on completion day. This is when you get the keys, the money transfers and the mortgage starts. It is important to note that the completion day for property sales is a time when fraud is a huge risk. Be extremely wary of any emails from anyone involved suggesting their bank details have changed.

Try not to be overly optimistic about how much you can afford monthly. Plan for additional costs such as survey fees, solicitor fees and stamp duty if you are in England and Northern Ireland, land and buildings transaction tax if you are in Scotland, or the land transaction tax if you are in Wales. Also plan for moving costs, not just a deposit. Buying a house can feel like a big process, especially if you are in a chain where several sales need to line up. But with the right preparation and support, most transactions do go through smoothly.

Applying for a mortgage takes time, patience and careful preparation. By keeping your finances stable, gathering the right documents and being realistic about what you can afford, you’ll give yourself the best chance of success. Remember, it’s not just about getting approved, it’s about securing a mortgage that fits your life and helps you move into a home with confidence.

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