Once you have found your dream property, put an offer to the vendor and had it accepted, you will need to secure the finances you need to complete the purchase. This will usually involve getting a mortgage.
Many people find applying for and getting a mortgage highly stressful. However, by making sure that you know what the mortgage application process is like you can ensure that it is both as easy as possible and also that you get the best mortgage for your individual needs.
The first thing that you are going to have to decide is who you are going to get your mortgage from.
You can apply direct to a building society (or other type of lender) for a mortgage or, alternatively, use a mortgage broker or other intermediary to help you.
The application process
Once you have decided what mortgage you want, you will have to complete an application form that will require information from you on both your (and anyone you are applying with) financial situation and information about the property that you are buying.
The information that the building society wants may appear complex and intrusive. However, they want that information for two reasons – firstly to ensure that you are going to be able to afford the mortgage and secondly that the property is suitable for the loan that is being considered against it.
If you apply for a mortgage in a branch, the branch staff may help you complete the form. Likewise, if you choose to apply via a call centre they may take down your details for you, and if you use a broker the broker may complete the form for you.
The application form will request information from you on your salary, and you will usually be asked for your employer’s details so that your salary can be verified. You will usually be required to provide pay slips going back a number of months. If you are self employed, then the building society would usually want to see your accounts from recent years.
They will also want to know what other outstanding credit you have, and they will often want to see your bank statements for a period as well. They will also probably expect you to complete a form detailing your monthly expenditure.
They will use this information to determine if you can afford the loan or if your existing financial commitments are too high. Don’t be tempted to give false information – the information you provide will be checked, and giving false information will not just prejudice your current application and it will prevent you getting any further credit (not just a future mortgage, but any other type of loan) and, since providing false information on a mortgage application is a criminal act, could also see you appearing in court and getting a criminal record as well.
Once you have submitted your application to your building society (or your broker has done so on your behalf), the building society will assess your application. Assuming that the building society finds everything is in order it will then issue you with a mortgage agreement in principle.
The mortgage valuation
Once the mortgage in principle has been confirmed, your building society arrange for a valuation survey to be carried out on the property being bought. The purpose of this is to ensure that the property is suitable to act as a guarantee for the loan that you are taking out.
It is important to remember that the purpose of the survey is to confirm the value of the property. It will give no indication of the condition of the property – if you want to know more about the condition of the property you need to ensure that you also have a structural (or scheme 2) survey taken out. The surveyor who carries out the valuation survey may be able to do this at the same time, so if you want a structural survey you should discuss this with your lender or surveyor.
The mortgage offer
Once the basic valuation has been completed, assuming the value of the property meets your lender’s requirements, you will receive a mortgage offer.
The mortgage offer contains information such as the address of the property, the purchase price, the mortgage amount and special terms and conditions. If your mortgage is being guaranteed by someone else, it will also include their details.