Last Updated on 3rd October 2020
Getting a mortgage approved is perhaps the first major step in purchasing a property. Without mortgage approval, buying a home is impossible unless you’re buying outright with cash.
Waiting on a decision from a lender or a broker can leave many of us worried. It can be agonising when you’ve found the perfect home and really don’t want to miss out. As a result, we’ve prepared this guide to ease any tensions and clear up any confusion surrounding mortgage approval.
Getting a mortgage approved involves:
- Finding a suitable lender (with a broker or direct)
- Providing your personal documents (ID, proof of income, bank statements, etc)
- Applying for a mortgage in principle
- Having an offer accepted on a property
- Mortgage survey of the property
- Formal mortgage offer
Whether you’re looking for guidance or simply want to know how the mortgage process works, we’ve got it covered. Our specialists are also ready to answer any of your mortgage questions.
How to get approved for a mortgage
There are typically four steps you’ll need to take before a mortgage can formally be approved, which are:
- Getting a mortgage in principle
- Applying for a mortgage once a deal has been agreed
- A mortgage survey of the property
- Mortgage approved and offered
There are usually four steps, as not everyone will require a decision in principle. This is especially true if you’ve already found a property and want to apply for a mortgage immediately.
An agreement in principle isn’t the same as being approved for a mortgage. Only a formal mortgage offer is a clear intent from the lender that they’re offering you the mortgage. A decision in principle is only ‘in principle’ and is usually the first step towards your mortgage.
This doesn’t mean to say that an agreement in principle is pointless. Getting an agreement in principle before you start your property search has many benefits. For instance, a mortgage in principle will indicate how much you’re likely to be offered. You can then plan your property search accordingly. It can be quite disheartening to find a property, only to apply and then be told that you can’t borrow the amount you had hoped for.
Should I use a broker or go directly to a lender?
Both a lender and mortgage broker can enable you to get a mortgage. That said, there are differences in how lenders and brokers operate.
A lender will only ever show you their own products. You wouldn’t find a Natwest brochure in a Halifax bank, which is completely understandable. Lenders just don’t promote their competitors. Although this may sound obvious, it’s important to understand when searching for a great deal.
Mortgage brokers are different for this very reason. If a broker is ‘whole of market’, then they will have access to the entire market. Brokers can then search suitable lenders for you with the aim of finding the best mortgage possible. There are thousands of mortgages available with different rates and fees, some with added perks. The odds of you going to a lender yourself and getting the best possible mortgage are very slim.
If you apply directly with a lender and they decline your mortgage application, it’s likely your credit score will take a hit. Mortgage brokers will also check to see if you’re eligible before applying. This simple method can keep your credit file intact. Our advisors certainly don’t apply for mortgages until they’re absolutely certain they’ll be approved.
We also have whole of market access including specialist lenders for when a mortgage application isn’t straightforward. This may be due to adverse credit or a limited company using retained profits for example. You can make an enquiry at any time to check if you’re eligible for a mortgage.
How difficult is it to get approved for a mortgage?
As a mortgage advisor, I’m constantly asked whether getting a mortgage is easy or not. As you can imagine, there isn’t one answer for everyone. While it may be easy for one person to get a mortgage, it can be difficult for somebody else. This is because lenders assess each case individually, as each borrower’s circumstances are never the same. It also may be easy for a borrower to get a mortgage with one lender, but be declined elsewhere.
Lenders will make assessments on your circumstances which will indicate whether they’ll approve your application or decline it. The circumstances which lenders will mainly focus on are:
- Your credit history
- Affordability (based on income and outstanding loans/debt)
- Loan to value (deposit amount and how much you need to borrow)
The property you’re aiming to purchase will also undergo a property survey. This is so lenders can establish whether or not the property meets their criteria. For instance, most lenders will only lend on traditional brick-built properties and those that don’t need extensive refurbishment.
Even if you have adverse credit, our advisors can still help. Don’t let this put you off applying for a mortgage. Many clients have been declined by high street lenders, to have a mortgage approved shortly after. Even if the property isn’t made from traditional materials, there are other alternatives such as refurbishment finance, which can be used for homes that can’t be bought using a mortgage.
You can check with an expert advisor to see if you’re eligible for a mortgage. If you do qualify for a mortgage, the entire process can be done online.
What documents will I need?
As a rule of thumb, you will usually need to provide the following before a mortgage can be approved:
- Proof of identity (passport or driving licence)
- Evidence of income (payslips, accounts/SA302 if self-employed)
- Proof of address (utility bill)
- Evidence of outgoings/outstanding loans (bank statements)
- Proof of deposit (bank statement or gifted deposit letter)
Depending on your circumstances, you may have to provide further information. For instance, if you’re a buy to let landlord, it’s likely you’ll have to present tenancy agreements to satisfy any concerns from underwriters. On the other hand, if you’re a contractor, lenders may want to see evidence of future work contracts you’ve secured.
Our advisors offer the facility for borrowers to make online mortgage applications. By utilising the latest financial technology, borrowers can obtain mortgages without leaving their homes. Documents can be sent online and your advisor can explain everything to you via phone and email. Even if you want a face to face meeting, our brokers are nationwide and can come directly to you.
How long does it take to get a mortgage?
A mortgage takes around two weeks to complete on average. Sometimes mortgages can be finalised quicker or they can take longer than two weeks depending on whether or not your case is straightforward. Nonetheless, a mortgage shouldn’t take longer than one month to complete.
Important: A completed mortgage is not the same as getting an agreement in principle. A mortgage in principle can usually be provided in a matter of hours, if not minutes, depending on how urgently you require the document. The turnaround time also depends on how fast you can compile your documents ready for a broker or lender.
There are certain variables that can either speed a mortgage up or slow the process down. You should also advise your broker on how urgently you need a mortgage. This is especially true if you need to meet a deadline with your home purchase.
How to speed up the time it takes to get approved
Factors that can affect the speed of getting your mortgage approved are:
- The speed at which you can gather the requested documents (ID, bank statements, etc)
- How long your mortgage broker takes to submit the mortgage application
- The time it takes the underwriter to assess your application
- The speed at which the surveyor can complete the mortgage survey
Borrowers with simple circumstances may find that their mortgage is approved faster when compared to borrowers with specialist circumstances. For example, applications that involve adverse credit or applicants that are self-employed can take longer to process. This is because underwriters may request additional information, which can delay your mortgage from being completed.
A broker may also need more time to gather information and research your personal circumstances to ensure that the right lender is approached. Mortgage cases are never the same and the time it takes to complete your mortgage will largely depend on your circumstances.
Remember, you can ask our advisors your mortgage questions at any time. If you’re still unsure or want to apply for a mortgage, our specialists are ready to help.