A step-by-step guide to mortgage applications

We know that buying a house can be a minefield, especially if you’re a first-time buyer. So we take you through the entire mortgage process, step-by-step. From making your first offer, through to completion, to help you avoid any surprises along the way.

5 min read
couple speaking to a mortgage adviser

1. Get a mortgage in principle

Before you start the house-hunting process, we suggest that you speak with a broker, lender or Independent Financial Adviser to run through some affordability checks. They’ll be able to provide you with a mortgage in principle, which estimates how much you can borrow.

You can get a mortgage in principle very quickly online or over the phone on the same day. 

It’s a useful document, which will help you focus on houses in your price range. Also, some estate agents ask to see it when you make an offer on a property, to prove that you are a serious buyer.

Each lender uses their own criteria, but they’ll generally review factors including (but not limited to) your incomings and outgoings, any debts you have, and the size of your deposit. They may also run a credit check to build up a better picture of your finances.

2. Find an affordable property

There are plenty of places you can start your house-hunt, such as with a local estate agent, or using websites like Zoopla and Rightmove. Some estate agents even offer virtual tours so you can view houses from the comfort of your own sofa.

Remember, you don’t have to go for the most expensive property in your bracket. You need to consider if you’ll still be able to afford your monthly repayments if your circumstances were to change in the future. You also need to factor in other costs too, like survey costs, solicitor fees, mortgage arrangement fees, moving costs etc.

Remember, if you fall behind with your repayments on your mortgage, then the lender could repossess your home in the worst-case scenario. Plus, the more you borrow and the longer your mortgage term, the more interest you’ll pay in total. 

3. Put in your offer

When you’ve found the perfect house for you, it’s time to submit your offer. This normally involves contacting the seller’s estate agent. For many people, it’s the most exciting and nerve-wracking part of the process.

You need to weigh up how much you’re willing to offer based on a number of factors, such as if the property needs any work, house prices in the area, and how much you can afford, for example. It’s likely that some negotiation may be involved before you reach a mutual agreement.

4. Make a mortgage application

Once you’ve found a new home and your offer has been accepted, you’re ready to make your mortgage application. This can be done either directly with the lender or through a broker.

Either way, they’ll ask for more in-depth information about your finances, the property you’re buying and the mortgage you want to take out. The lender will usually require supporting documents (including, but not limited to bank statements and wage slips).

A mortgage underwriter will then assess your application. The length of time this process takes varies from lender to lender and depends on how much paperwork is needed for your individual circumstances.

The lender will also arrange a valuation of the property you’re looking to buy, to make sure it’s worth what you have offered for it. Please be aware that this is not the same as a structural survey (more on this below). It is mainly used to help the bank decide how risky it is to lend to you.

5. Arrange conveyancing and solicitors

In the meantime, you’ll need to arrange a conveyancing firm to deal with the legalities of the house purchase. They will work on drawing up the contract and submitting searches with the local council to see if there are any planning or environmental issues you should be aware of, for example.

6. Arrange a building survey

Surveys can be expensive (from around £250 to over £600 depending on which type of survey you choose). But they can save you money in the long-run if you discover that a large repair needs fixing. This will give you the option to either walk away from the sale or the opportunity to ask the seller to reduce the house price.

7. Get building insurance

It’s a legal requirement to get building insurance in place before you exchange contracts and become the legal owners of the property. This will cover you for repair and rebuilding costs in the event of major damage to your property.

8. Finalise the offer

As mentioned, if you discover large repairs are required on the property you are buying, you can use your survey to renegotiate your offer. There are no guarantees that the seller will accept a reduced offer, but it can sometimes pay off.

Or you may find that the lender’s valuation comes back lower than your original offer. In that case, you need to ask the seller to reduce the price so your mortgage application is accepted. 

9. Exchange contracts

Once you’ve agreed your final offer with the seller and your mortgage has been approved by the lender, your solicitor will complete their paperwork and send you a contract to sign. This contract lays out the terms of the sale and the date of completion.

This is the point at which you transfer your deposit to your solicitor and exchange contracts, making the property legally yours.

10. Completion of the sale

Completion normally happens a few days after the exchange of contracts. On the agreed day, your mortgage provider will transfer your loan to your solicitor who forwards it on to the seller’s solicitor.

Once the funds have gone through, you can pick up the new keys. And your solicitor will update the Land Registry to confirm you are the new owner of the property.

Mortgages are secured against your property. This means your home may be at risk if you fall behind with your mortgage repayments.

Disclaimer: All information and links are correct at the time of publishing.

Adele Kitchen, Personal Finance Writer

Adele Kitchen

Personal Finance Writer

Adele is a personal finance writer with more than 10 years in the finance industry behind her. She writes clear and engaging guides on all things loans for Ocean, as well as contributing blogs to help people understand their options when it comes to money.