By the end of this chapter you’ll understand:

✓ What the lender may need during your application

✓ How long a mortgage application will take

✓ When you will receive your mortgage offer

Estimated Reading Time: 12 minutes

What is a mortgage application?

Your mortgage application is your formal request to borrow money from a lender to purchase your new home. Unlike your Agreement in Principle, this is where the lender carries out a much more detailed assessment of both you and the property you’re buying. The application includes information about:

• You
• Your income
• Your employment
• Your monthly commitments
• Your deposit
• The property
• The developer
• Any incentives being offered

Everything is checked carefully before the lender decides whether they’re happy to offer you a mortgage.

What information will you need?

By this point, your mortgage adviser will have already gathered much of the information needed. However, you may still be asked to provide updated documents such as:

• Proof of Income – Depending on your circumstances, this could include:
  • Updated Payslips
  • P60 (if not previously provided)
  • Employment contract, if new employment has started recently
  • Self-employed accounts
  • SA302s
  • Tax Year Overviews
• Bank Statements – Lenders will usually ask for recent bank statements to understand your income and spending.
• Proof of Deposit – For example:
• • Savings statements
  • Gifted deposit letter
  • Sale of an existing property

What happens after your application is submitted?

Once your adviser has submitted the application, several things happen, often at the same time.

• Initial Checks – The lender reviews the application to make sure everything needed has been provided. If anything is missing, they’ll ask for it before progressing further.
• Credit Checks – The lender reviews your credit history to understand how you’ve managed credit in the past. They’re looking for a consistent picture that supports your application. If your adviser already knows about any historic credit issues, they’ll usually recommend lenders that are more suitable for your circumstances.
• Affordability Assessment – The lender checks whether the mortgage is affordable. They’ll consider income, household expenditure, existing credit commitments, number of applicants, mortgage term, interest rates and future affordability.  This helps ensure the mortgage is sustainable, not just today but over the longer term.
• Property Valuation – The lender also needs to make sure the property provides suitable security for the loan. To do this, they’ll arrange a valuation directly with the new build site. This isn’t the same as a full survey. A valuation is carried out for the lender’s benefit to confirm the property’s value. If you’re considering a more detailed inspection, your adviser or solicitor can explain the different types of surveys available.
• Underwriting – This is often the part customers worry about most. In reality, underwriting is simply the lender reviewing everything they’ve received. An underwriter checks that the information provided is accurate, the documents support the application, the property meets the lending requirements and the application as a whole meets the lender’s criteria.  If they need anything else, they’ll simply ask. This is perfectly normal and doesn’t necessarily mean there’s a problem.

What if the lender asks more questions?

It’s quite common for lenders to request additional information during underwriting. For example, they may ask for a more recent payslip, an explanation of a large bank transaction or an updated proof of deposit. This is simply part of the process. Responding quickly helps keep your application moving.

When will I receive my mortgage offer?

Once the lender is satisfied with your application, they’ll issue your Mortgage Offer. This is one of the biggest milestones in your purchase. It confirms that the lender has agreed to lend you the money, subject to the conditions set out in the offer. Your mortgage offer will usually be sent to you, your adviser and your solicitor. Everyone can then begin preparing for the next stage of your purchase.

How long does the mortgage process take?

Every application is different. Timescales depend on the lender, your circumstances, how quickly documents are provided and the availability at the site to book in the valuation.  Some applications move very quickly, while others may take longer if additional information is required. Your mortgage adviser will keep you updated throughout the process.

What should you avoid while your application is progressing? 

Once your mortgage application has been submitted, it’s sensible to avoid making significant financial changes unless you’ve discussed them with your adviser. Examples of this are taking out new credit, financing a new car, missing payments on committed expenditure. If something does change, simply let your adviser know as early as possible.