31 Mar 2022
Most Commonly Asked Questions Answered
How long will the mortgage process take?
The average mortgage offer is produced within 7 days of application submission. This gives lenders time to assess documentation and book a valuation. This process can be sped up by ensuring you are able to provide the relevant paperwork to your advisor prior to application. Read our article on Getting Mortgage Organised.
Due to advancements of technology, we can now secure a mortgage offer in as little as 24 hours. This is thanks to lenders using automated valuation tools and automated income verification, making the mortgage process faster and getting you into your home as quickly as possible.
What is a good mortgage deal?
The lowest rate isn’t always the best mortgage deal. Lenders have various ways of assessing income that differs lender to lender. A lender with the lowest interest rate may lend clients considerably less than a lender offering an interest rate only very slightly higher.
There are many ways to assess both employed and self-employed income. For Limited company directors, we may use salary plus net profits or salary plus and dividends drawn from the company. When assessing employed applicants with variable income e.g., bonuses, commission, hustles etc lenders will vary on what percentage of additional income is accepted. Therefore, the best mortgage deal is one that provides the borrower with the features benefits they are looking for at the lowest rate which is different to simply choosing the lowest interest rate on the market and seeing how much they can lend you.
How do I know what I can afford?
We always recommend borrowers start out completing a budget planner. Lenders use both ‘affordability calculations’ and ‘loan to income’ models when assessing how much you can borrow. Affordability calculations will alter the amount you can borrow depending on your spending habits, credit commitments and size of family. Should you have loans, credit cards, and car finance, you may not be able to borrow as much as an applicant without any credit commitments.
When applying a ‘loan to income’ calculation’ lenders will use a multiple of your joint annual salaries / income to calculate your maximum loan. i.e., a couple earning £25,000 each, combined income of £50,000, may be offered 4.5 times salary from one lender and 5 times salary from another resulting in a loan of between £225,000 and £250,000.
Affordability can also be based on more than 2 applicants’ incomes. With new lenders coming into the market that can now accept up to 6 applicants on an application and borrowers can choose which of those applicants are on the deeds and who is simply a guarantor.
I am ready with a deposit to buy a house, but I have just moved jobs, what do I do?
It is common for people to believe that you need to be in employment for 3 months or show 3 months’ payslips to secure a mortgage. This is not true. Lenders understand that borrowers often move location and jobs and need to secure a home often prior to starting a role. For example, Teachers looking to start a new role in September will often want to purchase in an area they are moving to prior to starting the job.
Fortunately, we can place mortgage based purely on a future dated contract. This will depend on the organisation issuing the contract. In some instances, lenders will want to see the first monthly salary going into the bank account which is a lot easier than waiting three months!
Lenders do like to see no more than 2-4 weeks break in employment and they don’t tend to worry about you being in your probationary period either.
What can I do if I have a low credit score?
Don’t let a credit score dictate the time to buy. It can be more difficult when you have a small deposit (less than 10%) to secure a mortgage with a poor credit score, but when you have a larger deposit there are a lot more options available to you.
When lenders have the security of at least 15% deposit they become a lot more lenient with low credit ratings, often lending to borrowers with CCJ’s and past missed payments. The higher your deposit, the more likely clients are to secure a mortgage despite CCJ’s, defaults and missed payments.
We recommend downloading a copy of your full credit report as a starting point where you can see all the information on you that the lenders can access.