WHAT EXACTLY DOES GETTING A MORTGAGE INVOLVE?
FOR first time buyers, stepping into the world of mortgages can sometimes be quite daunting but Prospect Homes is here to give buyers a heads up about exactly what the mortgage process involves.
The next part of our First Time Buyers Guide is explaining just what happens when you apply for a mortgage; from what documents you’ll have to share with lenders to choosing a mortgage that is right for you.
To help us with this, we’ve enlisted the help of Andrew Mannion, director at RSC New Homes, who we work with to offer financial advice to all our customers.
Here Andrew explains the steps to take before you apply, during the application process and how to choose the best mortgage for you.
Step one – before you apply
Broker or no broker that should be the first question? If you work with a broker such as us here at RSC, they help you with everything including attaining your mortgage in principle (an estimate from a mortgage provider of how much they’re willing to lend you in theory) and getting all your documentation pulled together so when the time comes to apply, it’s all ready to send off to lenders.
Documentation you will need to gather before you apply includes:
- Three months’ worth of pay slips
- Three months’ worth of bank statements
- Proof of your deposit (this could either be a statement of a savings account or if you are receiving the deposit as a gift, then proof that whoever is giving you this has the money e.g. bank statement)
- Proof of address – this can be things such as council tax bills and utility bills
- Proof of ID – copies of your driving license or passport
- You will also need to alert your broker of any outstanding debts, credit cards, bank loans and car finance too
If you choose not to use a broker, you will still need to gather the above documentation.
Step two – it’s time to apply
At this stage, if you’ve instructed a mortgage broker to help you achieve a mortgage offer, they will arrange an appointment to discuss mortgage products in further detail and the advantages/disadvantages of different mortgage products and terms. Make sure your broker is ‘whole of market’, which means you will be getting advice from the whole of the mortgage market.
Once you have chosen your mortgage product you will then submit your mortgage application with the help of your broker including providing all the documentation to approve the mortgage in full. There will be a valuation carried out on the property you are purchasing which will detail information about the surrounding area and prices. Once the valuation has been completed your mortgage offer will be issued.
Step three – decisions, decisions
There are so many different mortgages out there, which is why it is important to speak to a whole of market broker, who can provide you with market advice on all types of mortgages. Mortgage rates are changing all the time, along with how lenders determine how much you can borrow, so take the advice from your broker (they know what they’re talking about!)
Your broker will help you with your mortgage offer validity. If you are buying a new build property you may need a longer validity on your mortgage offer, sometimes up to 12 months depending on how far away the property is from being built. Your broker will help you to ensure they recommend mortgage products that will be valid and offers that will last to your completion date.
If you choose not to use a broker some things to look out for include:
- Are you getting the correct advice, banks will only offer their own products, is this right for you?
- Arrangement fees – look into if it is worth paying for your fee or are there better rates without arrangement fees?
- Speed and turnaround – will they meet your exchange deadline and are they experienced in new home mortgages?