How To Apply For A Mortgage

When you are ready to take the leap into homeownership, understanding how to apply for a mortgage is essential. Applying and getting approved for a mortgage can seem daunting but with the right information and preparation, you can navigate the process with confidence.

Step 1: Assess Your Financial Situation

Check Your Credit Score

Your credit score plays a crucial role in determining whether you will be approved for a mortgage and the interest rates you will be offered. Before you start applying for a mortgage, it is wise to check your credit score.

A higher credit score increases your chances of getting a mortgage with favourable terms. If your score is low and needs a boost there are some quick wins you can look at which will help.

1. Pay down existing debts
2. Ensure you are on the electoral roll
3. Correct any errors on your credit report

Calculate Your Budget

Understanding how much you can afford is a key step in the mortgage process. Use a mortgage calculator to get an estimate of how much you will be allowed to borrow based on your income and expenses. Don’t forget to factor in other costs such as deposit, stamp duty, legal fees, moving expenses… Moving house can be a costly endeavour so make sure you factor these costs into your budget.

Knowing your budget and overall financial situation will help you set realistic expectations when house hunting and prevent you from overcommitting financially.

Step 2: Research Different Types of Mortgages

  • When it comes to choosing a mortgage, you will need to decide between a fixed-rate and a variable-rate mortgage. 

Fixed Rate Mortgage

With a fixed-rate mortgage, your interest rate remains the same for a set period, usually two to five years.

This offers stability and can make budgeting easier as your monthly payments don’t change.

Variable Rate Mortgage

These mortgages have interest rates that can fluctuate, often in line with the Bank of England’s base rate. A benefit of this is lower payments when rates are below but equally it also means you have higher payments when the rates rise.

Another decision to make is whether to choose an interest-only or repayment mortgage.

Interest-only Mortgage

Interest-only mortgages require you to pay only the interest each month, meaning you will need a plan to pay off the loan balance at the end of the term. They can lower your monthly payments but they often come with more risk and require a robust repayment strategy.

Repayment Mortgage

With a repayment mortgage, your monthly payments go towards both the interest and loan amount, ensuring that the mortgage is fully paid off by the end of the term.

Step 3: Get a Mortgage Agreement in Principle

An agreement in principle (AIP) is a statement from a lender that indicates how much they would be willing to lend you based on a preliminary assessment of your finances. Having an agreement in principle shows estate agents and sellers that you are a serious buyer and can give you an edge in a competitive market.

How to get an Agreement In Principle

To get an AIP, you will need to provide some basic information about your income, outgoings and credit history. The lender will then conduct a credit check (more often than not, this check does not impact your credit score). If you pass this check, you will receive an AIP that is usually valid for up to 90 days.

It is important to note that an AIP does not guarantee that you will get a mortgage however it is a strong indication.

Step 4: Find the Right Mortgage

Once you have an AIP, you can then turn your attention to finding the best mortgage deal. You should shop around as different lenders offer different interest rates, fees and terms. You can compare deals yourself or use a mortgage broker to help you work through the options. A broker can provide access to exclusive deals and offer advice tailored to your situation.

Avoid just focusing on the interest rate. Look at the overall cost of the mortgage, including arrangement fees, valuation fees and early repayment charges. The Annual Percentage Rate (APR) gives you a good indication of the total cost of a mortgage as it includes both the interest rate and any fees.

The UK Government offers several schemes to help first-time buyers and those struggling to afford a home (Shared Ownership, First Homes scheme). If you are eligible, these schemes can reduce the amount you need to borrow and make homeownership more accessible. 

Step 5: Submit Your Mortgage Application

Before you formally apply for a mortgage, be sure you have all of the necessary documents ready. Normally you will need:

  • Bank statements
  • Proof of identity (passport or driving licence)
  • Payslips or P60s
  • Utility bills

Completing the application form

The mortgage application form requires information about your finances, employment and the property you wish to buy. Accuracy here is vital as any issues or discrepancies could delay the process or result in a rejection.

Once you have submitted your application, the lender will then begin the underwriting process. This involves a thorough review of your financial situation as well as a valuation of the property. The lender may ask for additional information during this stage.

The whole process can vary but on average will last around one month, sometimes less but sometimes more.

Step 6: Awaiting The Decision

During the underwriting process, the lender will be assessing the risk of lending to you. This includes verifying your income, checking credit history and ensuring your property meets their criteria. If everything is in line, the lender will issue a formal mortgage offer.

There are three possible outcomes from this process:

Approval

If your application is approved, you will receive a mortgage offer which you will need to accept before moving forward.

Conditional Approval

If you receive a conditional approval for your mortgage application, your lender requires further information before making a final decision.

Rejection

If your application has been rejected, you should first find out why before then seeking advice on how to improve your chances with another lender.

Step 7: Finalising Your Mortgage and Completing The Purchase

Once you have checked all of the details of the mortgage offer are correct and you are happy with the terms, you can accept it. Once it is accepted, it becomes legally binding so be certain before proceeding.

You will need a solicitor or a conveyancer to handle the legal aspects of buying a property. They will carry out the necessary searches, handle the exchange of contracts and ensure that your ownership is registered with HM Land Registry. Your solicitor will also discuss with your mortgage lender to ensure the funds are ready for completion.

On completion day, your solicitor will transfer the purchase funds to the seller’s solicitor and you will officially become the owner of your new home. Collect the keys and move in!

Applying for a mortgage can be a difficult and arduous process but preparing and being well organised can make it easier. Keep informed about the UK mortgage market but more than anything, seek professional advice from experts to help guide you through the process with confidence and ease.

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Rupert Briggs

About the author

Rupert Briggs | Director, Epsom

Hi, my name is Rupert and I’m the owner and Director of The Personal Agent Ltd. Richard and I launched The Personal Agent in 2004 with a vision of it being a very different kind of agency. Having worked for local estate agents, we knew what the market was looking for – a personal service tailored to the needs of those who trust us with their properties, one that genuinely listens, adapts, and consistently delivers on its promises. I am passionate about ensuring that each and every landlord and vendor we work with only ever receives the very best in service, marketing and cutting-edge innovations to ensure that they achieve their property goals and we live up to their expectations.