Updated: January 14, 2022

A Complete Guide to the Mortgage Application Process

Struggling with your mortgage application process? Find out everything you need to know on how to apply for a mortgage in our in-depth guide!

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: January 14, 2022

The mortgage application process can be quite tricky to navigate, particularly if you’re a first-time buyer. But with plenty of thought and preparation beforehand, you can make it much more straightforward.

With the help of this step-by-step guide you’ll have a firm understanding of everything you need to know before you apply, what documentation you’ll need to provide for a lender and where to look for any help and guidance you might need.

What to do before you apply

Before you start thinking about submitting a mortgage application, there’s a few important steps you should take.

This begins with asking yourself some pertinent questions:

  • How much can you afford to spend each month on your mortgage payments?
  • How much deposit will you need?
  • What type of mortgage are you looking for and how are you going to get it?

Work out what mortgage you can have

Even before you find a property it’s important to have, at the very least, a broad idea of how much a lender could be willing to let you borrow for a mortgage. Otherwise, you could end up finding your dream property only to discover you can’t afford either the repayments or the deposit.

You need to think about how much you can comfortably pay each month and over what length of time. Traditionally, most mortgage terms are over 25 years, but there are some lenders who can stretch terms as far as 35 or even 40 years.

To give you an idea of how much you could borrow and what deposit you might need, you can use either of our mortgage calculators by clicking here and here.

Save for a deposit

The amount of deposit you’ll need will vary from lender to lender but, generally, the more deposit you have, the better your chances of qualifying for the best mortgage offers available. A good starting point is usually between 10%-15%.

Don’t panic if you’re unable to save as much as this, there are still plenty of lenders who will consider applications with less and 0% deposits are not out of the question, under the right circumstances, such as having a guarantor to support your application.

Check your credit reports

Downloading your credit reports in advance gives you the chance to review your credit score to confirm that it’s all in good shape before a lender looks at it (which they will). If there’s any inaccuracies or outdated information on any of them, you can make sure all of this is removed.

There’s some very simple steps you can take right now to help improve your credit score, such as checking you’re registered on the electoral roll at your current address. You should also avoid applying for any additional lines of credit if you know you’re about to apply for a mortgage.

Speak to an experienced mortgage broker

Once you’ve found somewhere to live that fits your budget and checked your credit score you’re ready to find the right mortgage. At this stage, one of the shrewdest moves you can make is to speak with a mortgage broker rather than approach a lender directly.

A lender will only ever be able to discuss with you the range of mortgages and interest rate offers they themselves have available, whereas an independent broker has the whole market at their disposal.

Our unique broker-matching service is designed to match you with an advisor equipped to deal with your specific needs. In this case – guiding you through the mortgage application process. If you get in touch we can arrange for a broker to contact you straight away.

Get an Agreement in Principle (AIP)

Getting an agreement in principle (AIP) can be a very valuable first step in the mortgage application process. It’s not an official mortgage offer but it does provide you with a documented estimate of what a mortgage lender could be prepared to let you borrow and on what terms.

Armed with an AIP, you can confidently make an offer on a property you’re looking to buy, in the knowledge that it fits within the amount you’re going to need to borrow to complete the purchase.

To get an AIP all you need to do is approach a lender and provide them with the following:

  • Most recent bank statements
  • Evidence of your earnings
  • Proof of identification (including your last 3 years’ address history)

Your broker will be able to help identify the best lenders who tend to give AIPs fairly quickly. Once you get an AIP they’re usually valid for between 30 and 90 days (depending on the lender), which gives you some breathing space for your property search.

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What are lenders looking for?

All mortgage providers are looking for the same thing when they review your application; confidence you can comfortably afford the mortgage repayments throughout the term.

The way they do this is by assessing, in detail, all of the following against their own eligibility criteria:

  • All of your income and outgoings: do you have enough disposable income to comfortably meet your monthly mortgage commitments?
  • Size of your deposit: does this fit within the provider’s lending policy?
  • Your credit history: how responsible have you been when managing your finances in the recent past?
  • The property you’re looking to buy: is it worth what you want to pay and is it in appropriate condition?

How to apply for a mortgage

The mortgage application process requires solid preparation and a fair amount of patience but if you stay close to the following recommended guidance, you’ll give yourself the best chance of getting the approval you need:

Step 1. Find the right mortgage

Before you can apply for your mortgage you need to make sure you choose the one that’s best suited for you and your specific circumstances. So, for example if you’re buying a residential property, is a capital repayment mortgage the best solution or interest-only?

If the property you’re buying is to rent out, you need to find a lender who can provide the best buy-to-let mortgage terms.

Once you’ve settled on the right type of mortgage for the property you’re buying, you need to consider what interest-rate offer would suit you best:

  • Fixed rate: The interest-rate is fixed for a set period of time (usually 2,3 or 5 years) and at the end reverts back to the standard variable rate
  • Tracker rate: Tracks an independently set rate such as the Bank of England base rate, so your repayments will rise and fall in line with this
  • Discounted rate: A lender will offer a discount on their standard variable rate for a fixed period (like fixed rates, this can be for 2,3 or 5 years)
  • Standard Variable Rate (SVR): It’s unlikely a lender will offer you a mortgage based on their SVR. Generally, this is the rate you’ll revert to after an introductory offer (like those outlined above) has finished. When you move onto the SVR you’re free to move onto a more attractive rate at any time

Searching for the right mortgage can be quite time consuming. This is where an experienced mortgage broker can be at their most useful. They’d be able to identify the best mortgage lender and rate, based on your situation, saving you a lot of time and, potentially, some money too.

A broker would also be aware of particular offers that haven’t necessarily been widely advertised to the general public and available from specialist lenders, rather than through a mainstream provider.

Step 2. Prepare your documentation

For your mortgage application, lenders will want to see the following documentation and having it ready in advance can save you a lot of precious time:

Proof of earnings:

  • For employees, the last three months’ payslips and your latest P60 statement
    • Payslips need to clearly show both yours and your employer’s name, date, tax period and both net and gross pay
    • To include any overtime or bonus’/commission the payslips you present must also clearly state this income
  • For self-employed, either:
    • The last two-three years certified accounts or accountants certificate
    • Your latest SA302 statement (including tax year overview) from HMRC
    • If less than two years’ accounts available, include a projected earnings forecast for the coming trading year
  • For retirement income you need to include pension statements and any payslips received

Proof of identification:

  • Current passport or driving license (must be in date and match the name on the application)
  • Acceptable evidence can include (address must match that shown on the application):
    • Latest utility bill
    • Bank statement
    • Council tax bill
    • Credit card statement

Bank Statements:

  • Depending on the lender the number of statements required could be anywhere from the last two-six months (some lenders, Santander for example, might not ask for any)
  • Must clearly show your name and address and match with the application
  • Statements provided must be for your main account showing income credits and all outgoings, matching with what’s stated on the application
  • Proof of deposit – a statement showing evidence of how savings were accumulated
    • If the deposit is being gifted, a lender will want a statement from the gifter confirming this
  • All statement pages must be presented
  • Most lenders now accept online statements providing the information is legible

Estate agent and solicitor:

  • Provide all relevant contact details for both, including registered address, email and phone numbers

Submit your application

Once you’ve found the right mortgage, had your offer on a property accepted and prepared your documentation you’re ready to lodge your application with a lender.

The timescales involved between submitting your application and receiving your formal mortgage offer can vary between lenders but typically this can take anywhere between three to six weeks.

This can take longer depending on the time it takes for your solicitor to conclude all their conveyancing duties. Once this is done, the solicitor can then begin the final completion process and funds transfer.

Calculating the associated costs of a mortgage

In addition to your monthly repayments and deposit, there’s a host of other additional up-front costs involved with getting a mortgage that you’ll need to budget for, such as:

  • Stamp duty: this will vary depending on where in the U.K you’re buying a property and the rate thresholds also differ depending on whether you’re a first time buyer or not
  • Brokers’ fees: The brokers we work with only charge a fee once a mortgage application has been successfully completed
  • Solicitor’s fees: These can also vary and it’s worth looking around but what’s more important here is to find a solicitor you can trust to complete their tasks as promptly and professionally as required
  • Survey/Valuation costs: These will vary according to the type of survey that you wish to have on the property. The cheapest option is a basic valuation and the costs will increase if you wish to have structural surveys done. The advisors we work with can give you advice on the survey options available.

Why apply through a mortgage broker?

For anyone getting a mortgage to buy a property, there’s two routes you can take: go direct to a lender or speak to a broker. Of these two options, only an experienced broker can give you the confidence the advice you’ll receive is completely independent and based on the market as a whole.

For the brokers we work with, the mortgage application process is their bread and butter – there shouldn’t really be any scenario or issue they haven’t already had to deal with, so are perfectly placed to guide you through to a successful completion.

As such, having an experienced broker on your side could be the difference between getting your mortgage approved or not.

Get matched with an experienced mortgage broker

With the right amount of planning, you can make getting a mortgage a much smoother process but you don’t need to try and struggle through on your own.

Give us a call on 0808 189 0463 or make an enquiry and we will match you with a mortgage broker who has years of experience dealing with mortgage applications, across a whole spectrum of different circumstances.

FAQs

What are the penalties for lying on an application?

In a worst case scenario, lying on a mortgage application could, potentially lead to a prison term of up to ten years. It effectively constitutes mortgage fraud and ten years is the maximum sentence that can be imposed by the courts.

There’s obviously a whole range of circumstances where someone could be accused of mortgage fraud. Someone providing mis-information about their income or marital status will not be dealt with in the same way as someone who is found guilty of money laundering.

In terms of your mortgage lender, they are within their rights to revisit and, potentially, demand a full return of their loan if they find you’ve falsified details on your application. This could ultimately lead to a full repossession of your property and will certainly make it very difficult for you to get approval for a home loan again. So, in short – don’t do it.

How could bad credit affect my mortgage application?

Applying for a mortgage with bad credit does make it more difficult to get approval. It all really depends on the severity of the credit issue you’ve had and how long since it was recorded on your report.

The most severe cases, such as bankruptcy, repossession or loan default will likely mean your application will be declined by most lenders. The good news is there are specialist lenders available whose expertise focuses on helping people in these types of situations.

The key is to check your credit history beforehand so you can review what’s recorded on your reports. Then speak to your broker about how to move forward from there.

Do you have to declare your dependents on a mortgage application?

Whatever information you’re asked for on an application you’re expected to provide and answer questions honestly. A lender may ask you about your dependents – typically any child under the age of 18 (or over 18 and in full-time education).

If your partner is a dependent then you must declare this too, if asked. However, you don’t have to go into any further details about their financial position or employment status.

Do you have to declare a serious illness on a mortgage application?

If you’re asked on an application, yes you do. However, a serious illness does not need to be a barrier to your mortgage being approved if you have sufficient provision in place to cover any potential outcome.

If your income, deposit and credit score all pass the eligibility criteria, you should have as much chance of being approved as someone with a clear bill of health.

Ask a quick question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

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FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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