The Mortgage Application: What's It All About?
So, you're ready to make the move and secure your dream home? The mortgage application process might seem daunting, but don't worry, we're here to guide you every step of the way. Let's break down what you can expect.
The Mortgage Application: What's It All About?
Securing a mortgage is essentially about getting the financial backing you need to become a homeowner. Lenders will take a close look at your financial health, your ability to manage repayments, and your credit standing. Your deposit and its source are also key factors in the equation.
Understanding the terms, interest rates, and features of various mortgage options is crucial.
Step 1
Gather Your Docs
You'll need to have some essential paperwork at hand to prove you're a good bet for the lender. Here's what you'll typically need:
Proof of income
Employment verification
Bank statements
Credit Score (though this might be pulled by the lender)
Outstanding Debts
Valid ID
The specifics may vary depending on your lender and the mortgage type you're going for.
Step 2
Can You Afford It?
Lenders use a special formula to figure out how much they're willing to lend you. This takes into account:
Your earnings
Outgoings
Credit background
Job history
Debt vs income ratio
Based on these factors, they'll calculate your loan amount and what your monthly payments will look like. Your deposit is also a key player in this assessment. Each lender has their own criteria, so be sure you're clear on what's needed.
Step 3
The Importance of Deposits
Your deposit isn't just a formality; it's a major part of the home-buying equation. The amount you'll need can differ based on the mortgage type and lender's guidelines. If you're a first-time buyer with a smaller deposit, some lenders might offer you a mortgage with a higher loan-to-value ratio.
Some folks even turn to a mortgage guarantor or receive a gifted deposit from family. Fun fact: the 'Bank of Mum and Dad' ranks as the UK's 9th largest lender!
Step 4
Who's Eligible?
If you meet the lender's criteria and can manage the repayments, you're in the game. Different mortgages cater to different needs, and adding someone else to the mortgage is also an option. Just be mindful of the responsibilities that come with shared ownership.
We always recommend chatting with a mortgage adviser to navigate the complexities of home buying. We're here to help, so feel free to reach out!
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.