When should I apply for a mortgage?

A problem that clients frequently experience is being unsure as to when they should apply for a mortgage. Clients often also wonder if they can apply for a mortgage before they have even found a property, meaning they’re ready to move when the perfect property is found.

So what should the process be? Unfortunately, you generally can’t apply in full for your mortgage before you’ve found your property because your lender will need to value the property. However, you can certainly approach a broker to find out how much you could borrow and what sort of rates you could expect to get.

Securing a ‘mortgage in principle’

We can assess your situation and give you an indication of how much borrowing is achievable. Furthermore, we can obtain an official decision in principle which makes a buyer’s offer look stronger to a vendor. If you are going to do an early exchange on a property, it is essential you contact a broker to ensure what you are contractually obliging yourself to buy is obtainable. We have had cases where clients have agreed to buy properties which are simply not affordable and then have had to get bridging finance to avoid losing their deposits and any fees.

Once you have successfully had an offer accepted, you will need to put in a formal mortgage application, which will then involve an underwrite of yourself and your circumstances and mortgage valuation. A mortgage valuation is for the lender only – it does not tell you any detail of the property itself so it is recommended that you get a survey independent to this. Once you have had a formal mortgage offer from the lender, the solicitor will begin the conveyancing process. This will involve various searches and checks on the property.

Once all these searches come back clear, it is safe to exchange contracts. It is at this point which you are legally obliged to purchase the property, and any monies put into the property purchase will be lost if you do not complete. If you are unable to complete, you could be liable for the whole amount – however, there is usually just some kind of fee from the vendor.

Delayed completion

Some clients exchange on a property purchase and have delayed completion. This is most common with new build properties where you may agree to buy the property before it’s built. This is done before the mortgage process has even begun and can sometimes be difficult as clients do not check they can acquire funds before they exchange.

Brokers can be extremely helpful here. We can ensure that when you apply for a mortgage, the whole process is as efficient as possible. If you contact a bank directly, the process is likely to be much slower. We understand the way each lender underwrites a case, what documents they ask for, when they do what and what kind of answers they need to see to gain formal approval. We also are very helpful in the conveyancing process as sometimes searches etc and communications between solicitors can be very slow – we can intervene to ensure everything moves and quickly and smoothly as possible.

We regularly turn cases around in a matter of weeks—for example, I recently secured approval for a mortgage of over £1million in just two weeks; loans of this size usually require a lengthy underwriting process, but my excellent relationship with this lender meant I was able to drive this through.