The Mortgage Process - Clan Financial Services

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The Mortgage Process

Here's how the mortgage application process works:

1. Agreement in Principle

As soon as you’ve decided on a mortgage it’s a good idea to get a mortgage offer in principle from your lender showing how much they’re willing to lend you in principle. This demonstrates to sellers that you’re a serious buyer. However, it’s not a guarantee that the lender will give you the money. This will still depend on the exact details of the property, the accuracy of the information you’ve given, and the outcome of credit checks.

The offer in principle will be valid for a limited time, usually up to three months.

To apply for one, you’ll need to complete a form giving details of your employment, income and financial commitments. The lender will run credit checks on you and will use this information to decide how much they are prepared to lend you in principle.

2. Application

You then need to fill in a formal mortgage application with your name, address, income and other personal details. It will also require the name and details of the joint borrower if there is one. You will also need to work out the exact amount you need to borrow and provide details about the property you wish to buy.

3. Documentation

You’ll also need to supply a variety of documentation. If you’re borrowing 85% - 95% of the property value, the lender will probably ask for:

•pay slips (often for the last three months)
•bank statements showing salary credits
•audited accounts or Inland Revenue statements of account going back two or three years (if you are self-employed)
•bank details for the Direct Debit mandate
•proof of identity
•proof of address
•proof of the last 12 months mortgage payments / tenancy reference.

4. Valuation

Your mortgage provider will then arrange for a valuation survey to be carried out on the home you wish to buy. You’ll need to pay for this survey. Some lenders may let you add this into the mortgage amount if you wish.

5. Background check

If you haven’t already had a credit check carried out in connection with a mortgage offer in principle certificate, your lender will then check your credit history, and confirm that the information you’ve given them is correct.

6. Mortgage Offer

If everything is in order you’ll get a mortgage offer letter. This is the official document which sets down the basis for the agreement between you and the mortgage provider. It can take 2 to 4 weeks to get to this point. You will then need to sign and return this to the mortgage company.

7. Legal Process

Once the mortgage offer is accepted, the legal process of 'conveyancing' begins. Your solicitor will carry out all the searches to establish that the seller is legally entitled to sell the house and to make sure that everything about the property is legally in order.

8. Signing the Contract

Your solicitor will draw up a contract covering the agreed price and any agreed fittings. Both you and the seller will sign the contract and agree a completion date.

9. Completion Date

Your solicitor will ensure that the formal mortgage contract known as the mortgage deed plus the funds from your mortgage company and any other money you’re putting in yourself as a deposit are all together ready for completion.

A few further tips

Original Documents -

If you’re asked to send originals, ensure you do – don’t send in photocopies! For a joint mortgage, your lender will need documents from you and your partner or associate.

Administration and Valuation Fees -

You might also have to pay a non-refundable fee to cover the lender's administration costs and a valuation. Many lenders will let you add the application fee to the total mortgage amount if you wish.