Hello and welcome to the December column about all things mortgages.
Many people we speak to have no idea what’s involved in getting a mortgage for a new home, especially if you’re a first time buyer or haven’t taken out a new mortgage in years.
The great thing about using a mortgage broker to arrange this is they will take the stress and hassle away from you when arranging the mortgage and deal with the lender directly on your behalf, as well as advising you on the best deals available for your circumstances.
The first thing to do is always look to get a ‘Decision In Principle’ agreed so you know what your parameters are when looking to buy a new home, such as purchase price, borrowing amount and what deposit you’ll need.
To do this, initially all you need to provide during your first appointment is your basic information such as personal details, your income and any credit commitments you pay like credit cards or loans.
Your broker will then calculate what the likely borrowing amount is available and submit an initial application to the relevant lender(s).
This then gives you the approximate purchase price you can look at when searching for properties and the deposit required.
Once you have this ‘DIP’, as it’s also called, you can start the process of viewing properties and will be able to provide a certificate as evidence of your ‘DIP’ to Estate Agents, who will look more favourably at any offer you submit if you already have this in place.
After you have an offer accepted on a property, which is done through your chosen solicitor, you’ll have to supply your supporting documents to the adviser, which will be used as evidence to a lender that you can afford the mortgage and for them to complete their checks.
A full mortgage application can then be submitted by your mortgage adviser on your behalf and it goes into a queue for the lender to work through.
The lender will conduct their checks, called underwriting, and if they are satisfied with the information supplied and it passes the final credit check, a mortgage offer will be issued.
That essentially guarantees you the mortgage borrowing and as long as there’s no significant changes to your circumstances before completion, your solicitor will complete the legal work required and you would expect to get the keys to your new home within a few weeks and then your mortgage will begin.
Simple as that!
That’s a brief overview of how it works and I hope it’s useful for anyone looking to buy a new property in the coming months.
The countdown to Christmas is well and truly underway, so I just want to send my best wishes to everyone for when the time comes.
I’ll be back in January with some information on what to do if you’re looking for a better deal on your current mortgage.
Merry Christmas.
