Buying a home can be a lengthy process. There are lots of viewings, mountains of paperwork, and many checks to go through before you get to the exchanging of keys and contracts.
If you need to If you need to borrow monies, there is no moving forward with a house purchase until you have a mortgage approved by a lender, and the time it takes to secure your loan can depend on a number of factors, including the likes of your credit rating, the results of a mortgage valuation survey, and your income and affordability assessment.
How Long will it Take to Secure a Mortgage?
Mortgage in Principle
The first step of the process is usually getting a mortgage in principle. This is simply a statement from a lender, stating that they can lend you a certain amount to purchase a home ‘in principle’. It is a really quick process if you have all the necessary documents ready (ID i.e passport, 3-6 months bank statements, and proof of income) and have picked out a mortgage deal. A lender will ask you for some basic information, such as your income, current financial status, etc., and will check your credit history.
This is not a guarantee that a lender will definitely agree to a mortgage in the future, but it useful to have to show estate agents., as it will demonstrate that you are serious about buying. Furthermore, your estate agent will be able to show you homes that could be purchased with the loan agreed in principle. Furthermore, an agreement in principle may speed up your application process once you have found a property you want to make an offer on, especially if you are going with the same lender.
The Mortgage Application
Filling in your mortgage application is not a lengthy process, it should only take a few hours at the most, as long as you have your finances in order and the necessary documents and information at hand. To determine the amount you are eligibility to borrow and your reliability to pay it back, lenders will need evidence of the following:
- Details of the property you have put an offer on, as well as information on the seller’s estate agent and proof of your deposit.
- Valid ID, such as a passport, to prove your identity and proof of your current address, such as a utility bill.
- Three months bank statements, which can be used to show what your current outgoings are, including the likes of other credit commitments, childcare, utilities, leisure time, holidays, money to savings, pension contributions, etc.
- Up to six months of payslips to provide proof of your income, including any bonuses or overtime. If you are self-employed, your accounts and a few years of tax returns will be required to determine what monthly payments you can afford.
A lender will review all this information and carry out a credit check. If they need no further information or clarification from you, they will arrange a valuation of the property you are hoping to buy, to determine if it priced correctly and suitable for a mortgage. Usually the valuation carried out by your lender will be a ‘Standard Valuation’, which is the minimum check required by law, before a mortgage can be approved.
An independent surveyor will carry out an inspection of the property, taking note of any major issues or defects that could affect the value property. They will also investigate what similar homes in the area have sold for, to see how your desired property compares. They will then complete a report known as a Standard Valuation, which will be reviewed by your lender.
If you want a more detailed survey – perhaps you have been burned before – there are a couple of more thorough evaluations you can have carried out before moving forward with the mortgage process. They are:
- Full Buildings Survey – Used to be known as a Structural Survey, a Full Buildings Survey involves a comprehensive inspection of the condition of the property, including any structural abnormalities or defects, any necessary repairs, and maintenance requirements. This is useful for period properties, larger homes, or non-traditional builds.
- A Homebuyer’s Report – Includes more detailed information than a Standard Valuation, including information an any current or potential future issues with the property and maintenance and/or repair costs.
If your lender is satisfied with the valuation and all other checks, your mortgage application should be approved and your offer will become official. Sometimes, the surveyor may determine that the sale price or your offer is higher than the value of the property. This is actually quite common and could be due to a number of issues, such a market conditions, structural defects or just a seller overestimating the value of their property.
These downgraded valuations are not just there for the protection of the lender, but also for your protection, to prevent you from paying more for a property than it is worth, as this may put you into negative equity. However, there are still options open to you to secure a mortgage in these instances. You can contact the seller with the results of the valuation to discuss a potential reduction in the selling price. If this is fruitless, and you really want the property you could increase your deposit amount to make up the shortfall.
How Long Does a Mortgage Offer Last?
Generally speaking, It can take between 2 and 6 weeks for your mortgage application to be processed and approved. However, if your application is a little more complicated, such as you are looking to buy a non-standard build, or have bad credit, it may take longer.
Once your mortgage application has been approved, the offer is usually valid for 6 months. However, some lenders may have a completion deadline for their offer. After this deadline has passed, you may be able to still use the same lender for a mortgage, but your eligibility is likely to be re-assessed as circumstances may change. Therefore, you may have to start the application process again and your new offer may be altered depending on your current circumstances.
Accelerating the Process
A mortgage broker can really help with the mortgage process as they will be familiar with all of the latest deals on the market, and the ones you are most likely to be accepted for. This will save you a considerable amount of time as you won’t have to research for the deals that are best suited to your circumstances.
Your broker will also help you to fill in your application forms and let you know what documentation you need to complete the process quickly. Furthermore, they will handle the submitting of the application and liaising with your solicitor to get the whole process moving much quicker.
Poor Credit Mortgages
Getting a mortgage with poor credit is trickier. Most mainstream lenders are reluctant to loan to those with bad credit as their poor credit history doesn’t provide the assurance they need that the loan will be paid back. However, this doesn’t mean that those with bad credit are completely ineligible for a mortgage. There are a number of niche mortgage providers that specialise in securing mortgages for those with no credit history, or serious blemishes on their credit record.
These lenders will consider the severity of the credit issue, the duration of the credit issues, the age of the problem, along with the standard eligibility criteria for a mortgage. It is likely that you will need to put down a larger deposit on a mortgage if you have bad credit as a bigger deposit will offset some of the risks of loaning to someone with bad credit. You will also need documentation to prove that you can afford the monthly payments including bank statements and pay slips. Furthermore, your outstanding loans, along with any other outgoings will be assessed and may affect the amount that you can borrow.
If you have bad credit and are interested in buying a home, get in touch with an experienced mortgage broker who has access to the whole market. They will be able to access a wider range of mortgage deals including those from speciality lenders that fit in with your requirements. This will make the process of applying for a mortgage go much quicker than having to research individual lenders yourself.
- A mortgage in principle may help to make the application process go a little smoother, by showing you and lenders what you can afford.
- A mortgage application requires valid ID & address verification, your estate agent and solicitor’s details, proof of income and outgoings and proof of deposit.
- A valuation of the property will be carried out to determine it is priced correctly and is suitable for a mortgage.
- Generally speaking it usually takes two to six weeks to get a mortgage approved.
- The application process can be accelerated by going through a mortgage broker who can find you the best deals that suit your circumstances.
- A mortgage offer is usually valid for 6 months.