Once you’ve had your offer on your new home accepted, it’s time to check back in with your mortgage adviser or lender, and secure your mortgage.
Applying for a mortgage
You can either apply to a lender directly, or your mortgage adviser can apply on your behalf. Either way, make sure you have your paperwork to hand to show that you’re able to afford the property, as lenders will want to see these key documents. 📄 You’ll need to give details of your income, any existing loans or debt and information about the property you want to buy. If you’re self-employed, you’ll need to show up to three years of signed accounts and associated tax calculations, plus your Self Assessment tax return. Check all the information carefully before submitting, as doing this later can cause hold-ups.
Choosing a mortgage
Speak to an experienced mortgage adviser who can recommend mortgage options that suit your needs. The main types of mortgages are:
- Repayment mortgages – Your monthly repayments cover the amount you’ve borrowed plus interest. By the end of your mortgage term, for example, 25 years, you will have repaid the amount you borrowed in full.
- Interest-only mortgages – Your monthly repayments only cover the interest charges. During your mortgage term, you don’t repay any of the loan initially borrowed. The idea is that you save enough money over the years to be able to repay the mortgage in full at the end of the term, for example, by selling another property or using cash savings.
- Fixed rate mortgages – The interest rate stays the same for the initial tie-in period of the deal, which can range from 1-10 years. Because of this, your monthly mortgage repayment amount also stays the same for that period.
- Variable rate mortgages – The interest rate is set by the lender and can go up and down, as can your monthly repayment amounts.
- Buy-to-let mortgages – A specialist mortgage, designed for landlords buying a property with the intention of renting it out to tenants.
- Discount rate mortgages – Also known as ‘discount mortgages’, these mortgages have a variable interest rate. The interest rate is discounted, usually below the lender’s standard variable rate (SVR). The discounted rate can either apply for a fixed term or the lifetime of the mortgage.
- Tracker mortgages – A type of variable rate mortgage, with an interest rate linked to the Bank of England base rate or another base rate. The interest rate goes up and down as it ‘tracks’ this rate. You benefit from lower monthly repayments when the tracked rate is low, and risk higher monthly repayments when the tracked rate is high.
- Offset mortgages – An offset mortgage links your mortgage with your savings and sometimes your current account. Your credit balances are offset against your mortgage debt, so you only pay interest on the difference, while also paying off the loan.
We define the main types of mortgages in our home-buying glossary.
What happens once I’ve submitted my mortgage application?
Your lender will review the details you’ve provided in your application and ask an underwriter (someone who evaluates and assesses the risk of your application to the lender) to review as well. They will also organise a property valuation, to check that the property is worth the amount you’ve offered to pay. This is not the same as a survey (see Step 7 – Consider a survey) – the valuation is a check for the lender’s benefit. After this, you’ll either receive a mortgage offer, be asked to provide more information, or have your application declined.
What happens if my application is declined?
If the lender is concerned that you won’t be able to afford your mortgage repayments, they will turn you down. No one wants to see the words ‘mortgage declined’ – but don’t worry, it’s not the end of the road! Every lender has a different set of lending criteria that they will assess you against. Check back in with your mortgage adviser as they can help you see where your application went wrong, how to fix it and help you with your next application.
What happens next if I receive a mortgage offer?
Congratulations! 🎉 You’ve reached another exciting milestone on the home-buying journey. Review the details of your mortgage offer with your solicitor and mortgage adviser. If it meets your needs, you can accept it by signing and returning it to the lender. You can usually do this online.
Mortgage offers usually last for a fixed period of time, although they can be extended in special circumstances. For example, if you’re buying a new build property, your lender might extend your mortgage offer if construction is delayed.
Your lender can withdraw the offer at any time if your circumstances change, for example, if you’re made redundant or are unable to work due to illness.
🟠 Time for a check in!
- You’ve found the right mortgage for you
- You’ve submitted your mortgage application
- You’ve received and accepted your mortgage offer!
Moneybox Mortgage Advice is provided by Moneybox Mortgages Ltd.
Your home may be repossessed if you do not keep up repayments on your mortgage.