You want to buy your dream home and that’s what our whole process is built around and that’s what a mortgage lender’s process should be built around too.
Not fancy reading all this? Listen to my podcast (scroll to the end) and I’ll take you through it!
The initial stage starts with finding out your information and completing a fact find. We give
people the option to relay the information over the phone with the adviser filling it in, or sending it across to you so you can complete it in your own time, check your bank statements and send it all back.
The key goal of that form is to assess the affordability and make sure that you have the finances available to get your mortgage. We look at your budget, understand your circumstances, your income and then give you the correct advice and make the most suitable recommendations.
Nowadays, they scrutinise your bank statement and look at how you spend your money, rather than using income multiples.
We then go onto our sourcing system to find a relevant mortgage based on your purchase price and mortgage value, i.e., the amount you want to borrow. We can then start with finding the cheapest lender available. We then go onto the cheapest lender’s website and calculate exactly how much you can borrow using their affordability calculators.
We do this because, if you take five of the cheapest interest rates available, one might lend £50,000 where another one might lend £120,000. It depends on what you’re looking for.
The maximum that you can borrow might not always come with the lowest interest rate. That’s just a consideration that we have to fight through to the advice that we ultimately give you. We like to work on estimations and guidelines. A mortgage lender for a first time buyer will generally not lend you more than 4 1/2 times your single or joint income. As a home mover with a great credit score and everything else is perfect, then you could borrow up to 5 times.
We like to allow 24 to 48 hours for this because it’s customer dependent: particularly if you’ve got a tricky income, multiple incomes or adverse credit.
The main aim of this stage is to make sure that we have done every bit of due diligence to avoid coming up against any problems later.
Step three is completing an agreement in principle, which is ultimately a credit score.
We take the information and the affordability calculation to go onto the lender’s website and submit an agreement in principle. That can take us up to an hour and a half, depending on the lender’s website.
If a computer says a “yes or no” scenario, that’s an immediate response. In other instances, lenders like a person to look at it, or they have a 24 hour turnaround. They might even request more information at this stage to satisfy their requirements. Step three doesn’t take more than twenty four hours.
Once that is agreed, you then get an agreement in principle certificate (AIP certificate) to take to your estate agent.
The mortgage isn’t guaranteed at this stage, but you are a long way down the road to getting it agreed. Passing the credit score means the hardest point is behind you. If you fail that stage then there’s no going forward with that lender: we will find out why and source an alternative lender for you. One key thing: I don’t recommend more than three credit searches over three months.
Once you’ve got your certificate, you go and find a house. You view it. You offer. It gets accepted.
Step four is to complete the application. Again, we do the application on your behalf. Once you submit it across, the lender asks us for a lot of documentation, stating who you are, where you’re living, ID, passports, bank statements, that sort of stuff. If we’ve not met you face to face we need two forms of personal ID and two forms of address ID.
We will submit the application and send you a copy, as well as the initial fact find and accompanying declarations that you have to sign. You then return the signed documents with pay slips, bank statements, proof of income, all those sort of bits and bobs that we need to process your application. The application submission from our side takes up to two hours. We then do a justification and suitability letter which comes out with that payment request. Your job then is to get the paperwork back to us so we can send it off to the lender.
Most lenders take 24 to 72 hours to assess documentation. It’s a bit annoying because if we send something over on Monday it might be 24 hours, or by Wednesday, Thursday for another lender. They may request further information to get, then those additionals get sent over and we go through the 24 to 72 hour process again.
It can realistically take up to twenty one days, which is our average. I’ve had them done in four or five days and I’ve had them in longer than twenty one days, but either way it gets you to the mortgage offer. That mortgage offer is your formal agreement that your mortgage is in place.
Step five, mortgage offer, around about 21 days after the application has been submitted.
At this stage, most mortgage brokers, banks and building societies stop working for you. We will continue thereafter because there’s still on average another six to nine weeks involved. This time is dependent on your solicitor, the chains of houses involved if you’re a first time buyer, and the people who you’re buying from (unless it’s a new build).
The whole process from application to moving in is an average of twelve weeks. We will help you by chasing your solicitor, liaising with the estate agent and making sure everything goes through quickly.
We specialise in helping Self-Employed people, so the main aim for us is to do everything from fact finding through to completion. We do this to enable you to focus on your business, managing your staff, providing for you family, whatever your reasons for being in business are.
That’s the five key steps from beginning to end, even if the time scales change depending on your personal circumstances, that’s a good outline of the twelve weeks.