Euan and Dan from the Yellow Brick Mortgages team talk us through the mortgage application process.
What is the mortgage application process?
There are different stages to getting a mortgage and buying property. The first call is to make contact with a broker.
We’ll get to know you, understand your circumstances and what you’re looking to achieve. That way we can research the marketplace and get you an Agreement in Principle from a lender so you can make an offer on a property.
Once you’ve had an offer accepted, it’s a case of finalising all the figures and submitting a full mortgage application, where we pass your documents to the lenders, they do their own assessments and then release the mortgage offer.
How should I prepare for a mortgage application?
We always ask for bank statements and payslips and details of your deposit. If you’ve ever had any issues with credit in the past, perhaps a late payment, we’ll get a credit report from someone like Experian or Equifax. It’s beneficial to know about any issues up front.
If you’re employed, we normally ask for three months’ payslips and bank statements. If you’re self-employed, we ask for two years’ books or tax returns as well.
How can I be sure I can afford a mortgage?
We’ll use your bank statements to talk about your income, expenditure, and future bills to make sure that everything is affordable. A lot of people think that it’s just the deposit that you need to save for, but there are other costs too like legal costs, stamp duty (if you’re not First Time Buyers), insurance cover, etc.
What happens once I find a property I like?
The reason an Agreement in Principle is so important is it shows that you are in a position to buy. It provides evidence to the vendor or estate agent that you can get a mortgage for the value of the property.
We work with a lot of local estate agents and we talk to them about the kind of home you might be looking for, your budget, etc so we can help find a good property for you.
We also set up searches on property portals, getting alerts on suitable properties so we can let you know about them. We’ll even set up viewings and make offers for you if you want us to, it’s all part of the service.
How will I know what to offer?
We’ll always talk to clients about what a property price will mean for a mortgage: what it will cost if you increase your offer by £10,000 and whether it will still be affordable.
This sometimes changes the client’s perspective – they might have set a maximum limit, but we can explain that offering another £2,000 could add just a few pounds a month onto the mortgage. That way they feel more confident about making an appealing offer.
We are also happy to assist in giving you guidance on a property and the offering process or can handle the negotiations for you with the estate agent to assist you in getting the property agreed for the best possible price.
What happens once your mortgage application is submitted?
Ẅe’ll set up an appointment to finalise the figures and check what’s changed between getting an Agreement in Principle to having an offer accepted. We’ll check that the lender who gave you the Agreement in Principle is still offering the most suitable product.
If not, we’ll see what else is available. Next, we compile all your documents and send them off to the lender for you, and get the valuation underway. This is a crucial part of the process. Getting the valuation quickly shows the sellers that things are moving along nicely, but also highlights any defects with the property.
There could be something that could impact whether you will buy the property or possibly change the price you’re paying. We’ll also start work on the legal side of things. This can be quite a daunting part of the process, when packs of paper come through that you’re expected to complete – we’re always on hand for any questions.
Once all that’s done, the underwriting from the lender is issued and they’re happy with the valuation, the mortgage will then be offered.
How long does it take?
Once you’ve had an offer accepted, things can go quite quickly at first. Within two weeks there will be lots of requests from the solicitors, from us as the brokers, from estate agents – but once they have what they need it tends to go quiet. It almost feels like nothing is happening.
But that time is crucial – it’s when all the legal work is being done. We always reassure clients that everything is still moving and explaining what the wait is all about. If anything stalls we’ll chase it up.
Why would a mortgage offer be declined?
There are instances where a lender will give you an Agreement in Principle, but when it gets to the full mortgage application, they might say they won’t proceed or will only proceed on a reduced loan amount. The main reason is usually a change in client circumstances.
Perhaps since the Agreement in Principle was done, the client has changed jobs or taken out other finance that impacts what they could borrow. It’s not the end of the world, we will seek out alternative mortgage deals for you.
What happens after the mortgage offer has been issued?
Once the offer has been issued, you can breathe a sigh of relief and relax. It’s then just a case of the legal work being completed and setting a time to exchange contracts and complete on the property.
Why choose to work with a Mortgage Broker?
What clients really appreciate is that we do all the research and legwork for them and that we are just a phone call away at any point. We’re here for any questions – by phone, by WhatsApp, whatever works for you. It means you always know what’s happening.
If we don’t know the answers right away, we find out and come back to you. We stay in contact with you from the moment we start talking about a mortgage until you pick up the keys to your new home.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE