One of the most stressful elements of buying a home is getting a mortgage. Sadly, there isn’t a set time you can expect to wait before you get a mortgage application approved.
Frustratingly, there are multiple steps to complete even before you can apply. Each step can take from a few minutes, to hours or even several days finish.
However, there are some common-sense ways we can speed up the process and make it’s easier to get a mortgage and take one step closer to moving into your next home.
What does it depend on?
As a process that involves quite a bit of paperwork, there can be natural delays. However, the process to get a mortgage depends on how efficiently the three parties act.
Firstly, you. Taking a long time to find and submit documents, will slow the process down. Also, submitting incorrect or incomplete documents will grind the process to a nail’s pace.
Second, your mortgage broker. They can only complete their side of the paperwork when you’ve sent in your documents.
Third, the lender. Sometimes your chosen lender will approve your application within days. Other times, they may have a backlog, so will take longer. If your paperwork is incorrect or incomplete, then you could add weeks to the process.
By understanding where you can speed up the process, means you’ll be able to do your best to make the process quicker.
Can I speed up the process?
Let’s start with your situation. Regardless of whether you’re a first-time buyer or moving up the property ladder, you should get the basics in place before applying for a mortgage.
In addition to having a suitable deposit, it’s best to check your credit rating. There are lots of ways to improve it including joining the open electoral register, paying bills and debt on time, and clearing any high-interest credit cards.
Ask for a promotion or a raise at work. Any lender wants to know your income is reliable and steady. So try and squeeze your boss for a little more and stick with the same company for a few years.
Applying for a mortgage
Roughly speaking, the mortgage application process has two phases. Usually, the quicker you act, the faster the process goes.
The first part is to get a mortgage agreement in principle. This is easier phases and depends on your circumstances as well as jumping through the necessary paperwork hoops.
You have less control over the second phase. In this step, your broker submits the full underwritten application, which leads to a mortgage offer. As this is largely down to the lender, this phrase is more complicated and depends on factors you have little or no control over.
Getting an agreement in principle?
Firstly an agreement in principle is someone saying that they could lend you a certain amount for an item or property. It is not a mortgage offer and while most do become loans, it’s not uncommon for lenders to revise their offer or withdraw it.
This document will state what the bank will consider lending you based on your deposit, credit score and income. Again there are no guarantees but this figure is likely to be your maximum budget.
As the first step in the process, it’s usually fairly quick to get an agreement in principle from a lender. If you have all the necessary documents compiled in a folder and have selected a suitable loan, then it can as little as 15 minutes for the lender to agree.
Of course, some lenders will need a few hours to review the paperwork. And in certain circumstances, it can take a few days. The vast majority of applications will have an agreement within a working day.
While each lender will ask for different paperwork as part of their mortgage in principle process, all at a minimum will ask for:
- 3-6 months’ bank statements
- Proof of your income
Your current bank should have this on file and should be able to give you a mortgage in principle without much hassle. But it’s worth remembering they might not offer the best mortgage deal for your situation. So always compare a few different options.
Having a bad credit history could lead to rejection or request for further information. The lender will want to satisfy themselves before approving your application and so you could be waiting a few days.
You will, of course, need to provide more information for the lender to fully assess your situation in order to fully approve your mortgage.
Converting a mortgage agreement in principle to an offer
When it comes to making an offer on a property, having an agreement in principle acts in your favour as you have proof that a lender is considering to lend you the money.
With an accepted offer, you can start with the second part of the mortgage application. Typically, your broker completes the paperwork and submit this with supporting documents to the lender.
The lender then assesses your ability to repay the mortgage based on your current income, credit history and the property you intend to buy. As part of this process, they’ll stress test you to determine if you can still repay if you are made redundant, become ill and if you can still maintain your current lifestyle.
This can take some time (up to 40 days) as mortgage regulations have tightened since the recession. Completing these steps can take anywhere from a few hours to several days. Again it depends on how simple your financial circumstances are.
Should you be able to tick these boxes, then it’s on to the legal checks and surveys. Your lender will insist on a mortgage valuation survey. This is different from a property survey.
Typically someone who works for the lender will conduct the mortgage valuation survey. In addition to surveying the property, they’ll also study the local property market to ensure that you’re paying a fair price.
Should they conclude that you’re overpaying, then they might reject your application or ask for a bigger deposit.
While this sound like a long drawn out process, having to wait for buyers and seller to be able to move can grind the process to a halt. That’s why it best to keep in regular contact with estate agents, solicitors and mortgage brokers.
How can I speed things up?
As you can see, there’s little you can do to speed up the second phases of the process. However, using a mortgage broker can make the whole application process faster.
A broker, such as London and Country (who charge no fees), will already be familiar with a range of lenders, their products and criteria. They’ll know what documents you’ll need and how best to present these in your application to make the lender’s decision easier.
If you choose to go it alone, then you’ll spend hours researching lenders and their criteria. This is before you have to speak with or meet individual lenders, not to mention the reams of paperwork you’ll need to complete.
Another way to speed up your application is to reply to your broker’s emails or call on the same day. If you can supply documents that day, they’ll be more motivated to complete your application as you’re making their job easier.
Again good communication is key. If you can, be proactive and call your broker, solicitor and the estate agent weekly.
How long does a mortgage offer last?
With the process complete and successful, you’ll find that a standard mortgage offer is typically valid for up to six months. If you’re re-mortgaging, then it’s usually valid for three months. This is because purchasing a property takes longer from application to completion.
To make the situation more confusing, some lenders have a completion deadline rather than a time limit. While this means you can exceed this and still use that lender, you will be re-assessed. So you’ll be starting from the beginning again.
Should your circumstances change during the process, then you may be offered a new deal or better terms.