The mortgage application process explained
Everything you need to know, from start to finish
Last updated on
Oct 15, 2024 22:39
For first-time buyers, the mortgage application process can seem like a journey into the unknown. You know there’s a lot to do, but what do you have to do, when do you have to do it, and why?
We’re here to help. This article walks you through the steps needed to get a mortgage, from the early prep to the day you get the keys.
To make the whole mortgage application process smoother and quicker in the long run, it’s a good idea to get your ducks in a row as soon as possible.
Here are four questions to answer before you start:
First things first: work out what your budget is. Your budget is made up of two things - the amount you need to save for a deposit and what you need to borrow (your mortgage). Together, these will let you estimate the property price you can afford.
To work out the maximum amount you can borrow – and the maximum property value you could afford – punch your numbers into our mortgage calculator.
In other words, are you in a strong position personally, professionally, and financially to get a mortgage application across the finish line?
Here’s what most lenders will ask, so have your answers ready.
Find out more about improving your credit.
Pro tip: a bit of admin now will save you from a frantic mid-application passport hunt later. Gather everything you need to apply for a mortgage and keep it together in a drawer or folder. Applications can differ from one lender to the next, but you’ll almost certainly be asked for:
Most first-time buyers use a mortgage broker to guide them through the application process. But you can go it alone and deal directly with the lender yourself - totally your call.
Mortgage brokers can help you:
Habito is a mortgage broker with a twist: we’re exclusively online, and we’re totally free. That means you can do the entire mortgage application process from the comfort of your sofa. Get started here.
Fully prepared? Then we’re good to go. Here are the key steps in the mortgage application process.
A mortgage in principle (MIP) is a shiny certificate from a lender or broker that shows how much you could borrow. It takes into account your earnings, the size of your deposit, and your outgoings. It’s no guarantee, but it gives you a pretty good idea.
You can also take it to property viewings to show you’re a serious buyer.
How long does a mortgage in principle take? It can be done and dusted in a matter of minutes. Get your free MIP here.
Now for the exciting part – househunting. Once you’ve found a place that ticks your boxes, it’s time to make an offer. And armed with your MIP, sellers will know you mean business.
How long does this step take? As long as it takes to find the property you love! Your MIP won’t expire, so there’s no rush. However, if there are lots of people interested in the same property, the process of making an offer could take a couple of weeks (sometimes longer). The seller will tell you if they’ve accepted your offer.
An agreement in principle (AIP) is the first part of your formal mortgage application. It’s like a mortgage in principle, only more detailed.
Your AIP will tell you that a lender is happy to lend you a specific amount for a particular property, using the information you provided. This includes:
How long does this step take? For you, submitting all of the documents can take as little as 20 minutes. However, a lender might take 48 hours to a week to process your details and get back to you.
What happens if my mortgage approval is declined? Ask your lender why and try to solve the problem before you reapply. Your broker can help. Find out more on what to do if your mortgage is declined.
If you have an agreement in principle, it’s time to talk to a solicitor. You’ll need one to exchange – legally transfer ownership of the property to you. A solicitor will check that:
A solicitor will also formally seal the deal between you and the seller once your mortgage is confirmed.
How long does this step take? As long as it takes you to search and choose a solicitor! You might have a solicitor in mind already. If not, we can help - check out Habito Plus.
Almost there. The next step is to get your documents together and send them to your mortgage lender.
At this point, the process is no longer in your hands. And, with your formal application submitted, you can sit back and wait while your lender is busy checking all of the important details.
How long does it take to process a mortgage application? It generally takes around 4 to 6 weeks for the lender to process the mortgage application at this stage. So, hold tight.
What happens if my application is declined at this stage? If your application is declined after your formal application, you’ll need to find out why. It could be because:
A rejected mortgage application is tough. If it’s a problem with your eligibility, you should fix it before you reapply. If you’re using a mortgage broker, they can help you regroup and prepare another mortgage application, either with the same or another lender.
With an official mortgage offer in your pocket from your lender, it’s time to exchange contracts.
That’s when your solicitor and the seller’s solicitor agree that all the paperwork looks good, and tell the lender to go ahead and send the mortgage money to the seller.
Once that’s done, the property is legally yours, and you can start looking forward to move-in day. That’s officially a wrap on the mortgage process for now.
What is a mortgage in principle? Why get one? And what do you need to make it happen? Here’s everything you need to know about an MIP.
Here's all you need to know about how long a mortgage application takes.
Habito specialises in helping you get the best mortgage or remortgage, all online, for free