The mortgage application process

Before you start the mortgage application process, make sure you shop around so to speak. Explore all your mortgage options so you have a base of understanding before you engage with your bank or an expert financial advisor.

Typically many customers may begin with a conversation with their bank or mortgage lender. But this should not be your only conversation as they may be limited to their current mortgage offering.  What many customers may not be aware of, is that there is a vast array of mortgage lenders which offer mortgages only through financial expert or mortgage brokers. So speak directly to a mortgage lender and also speak to a financial expert or mortgage brokers as with a frank and open conversation on your current financial needs and future goals. A good financial expert will be able to present options, which could be better suited to meet your current but also future financial needs.

Understand the different types of mortgages (more on this later) and use affordability tools yo discover how much you could realistically borrow. Advice can also be sought from certified financial expert or mortgage brokers who could search for the best deals and help with administrative tasks such as paperwork.

Mortgage - Agreement in Principle 

You can also speak to lenders directly or you can use a financial expert (link to expert page). What most customers may not be aware of is that there is a vast array of mortgage lenders which offer mortgages only through financial expert or mortgage broker. It is good to speak! So speak directly to a mortgage lender and but also speak to a financial expert.

Most will ask basic questions about your financial status and credit score to determine what sort of mortgage may be right for your circumstances. If they’re willing to lend you money, you can apply for an Agreement in Principle (AIP).

The AIP is a preliminary indication that you’re approved for a mortgage of a specific amount. Note, however, that it does not guarantee a binding mortgage offer will be made. You can apply for an AIP as soon as you’re ready to start viewing properties, and with the agreement in hand, you show sellers and real estate agents that you’re responsible and ready to buy.

Mortgage application

Once you’ve made an offer on a home and it has been accepted, you can then make a formal mortgage application. Though beyond the scope of this article, it’s also vital to complete a survey of the home to evaluate its condition.

The lender will comprehensively analyse your financial situation, and if satisfied, grant you a binding mortgage offer. This usually occurs in two to six weeks.

What Mortgage fees will I have to pay?

In addition to mortgage repayments, numerous expenses are also potentially  applicable. However the fees may not be required depending upon the mortgage you choose. Take the time to read up on them as many are misunderstood or underestimated by borrowers.

The main fees you need to be aware of include:

• Arrangement fees – the fee for the mortgage product itself.

• Valuation fees – the valuation fee pays for the lender to value the property and ensure it is worth the amount you’re asking to borrow.

• Mortgage account fees – this covers the cost of administering the mortgage.

• Mortgage broker fees – some brokers may collect a fee for arranging the mortgage.

• Booking fees – a smaller fee that depends on the size of the mortgage. It may be incorporated into the arrangement fee or charged separately, and

• Telegraphic transfer fees – otherwise known as CHAPS (Clearing House Automated Payment System), this fee pays for the lender to transfer money to the solicitor. 

  

Other mortgage-related expenses

Aside from obvious expenses like removalists, you also need to consider:

• Stamp duty (England and Northern Ireland) – buyers must pay Stamp Duty Land Tax (SDLT) for homes over £250,000. However, first-home buyers only need to pay SDLT for homes over £425,000.

• Land Transaction Tax (LTT) – in Wales, this tax replaced SDLT in 2018 and applies to properties over £225,000. 

• Land and Buildings Transaction Tax (LBTT) – the equivalent tax in Scotland but with a lower threshold. LBTT applies for any residential property over  £145,000.

• Legal and survey-related fees – in Scotland, these constitute a Home Report.