With hundreds of deals to choose between and a mountain of admin to sift through, applying for a mortgage can be a complicated and time-consuming process. But we're here to help.
This guide offers advice on working out whether now is the right time to apply for a mortgage, and outlines the steps you'll need to take to get your home loan approved.
Things to do before you apply
1. Work out your budget
You don't need to have found a property at this stage, but you do need to have a price range in mind. Use property portals such as Rightmove and Zoopla to get an idea of how much homes might cost in the area you want to buy in.
You'll need a deposit of at least 5% of the property's value to get a mortgage. To work out whether you'd be able to borrow enough to cover the rest of the purchase price, use our mortgage borrowing calculator below.
- Find out more: how to save for a mortgage deposit and the other costs of buying a house that you'll need to factor into your budget
2. Think about whether you're mortgage-ready
Although lenders have different criteria when it comes to who they'll lend to, mainstream lenders will all expect you to have a good credit score. If you have a poor credit history, or no history of using credit at all, you will need to spend some time improving this before applying for a mortgage.
There are three main credit agencies: Equifax, Experian, and Transunion (formerly Callcredit). You can get your statutory credit report for free from any of them. Websites such as Credit Karma (formerly Noddle) and ClearScore also offer this information.
A couple of ways to improve your credit score are making sure you're on the electoral roll whenever you move somewhere new, and having products such as credit cards that you pay off in full and on time to prove you can manage your money responsibly.
It also helps if you are in steady employment, with a regular income. If you've recently changed jobs it may be a good idea to wait until you've been in the role for at least six months before applying.
- Find out more: how to improve your mortgage chances
Step-by-step guide to mortgage applications
Step 1: Find a mortgage
If you're ready to buy a home, you'll first need to find the right mortgage deal. There are lots of things to consider, including the type of mortgage that will best work for you and how long a term you should go for.
A mortgage broker can help you to make these decisions. A good broker can advise on which providers are most likely to accept your application and what type of product will best fit your requirements. Getting professional mortgage advice can be an especially good idea if you are a first-time buyer.
Ask your broker to calculate the total cost of your mortgage, explaining all the charges and fees - along with any conditional add-ons such as early repayment charges.
You can also find mortgage deals yourself by shopping around online or speaking directly to different lenders.
Whatever you do, don't just apply to your current bank without shopping around. You're unlikely to get the best deal, and this could cost you thousands more over the term of the mortgage.
- Find out more: how to choose a mortgage broker
Step 2: Prepare documents for your mortgage application
To apply for a mortgage, you'll need to provide:
- proof of ID
- details of your employment
- up to six months of bank statements.
Only certain documents will be accepted, and you'll usually need originals rather than scanned or printed versions (the exception to this is bank statements - printouts or PDFs of online statements are generally accepted).
Proof of identity
For proof of identity, you're required to show either your passport or photo driving licence.
Note that having an old address on your driving licence can lead to complications, and you may have to provide much more documentation to prove your address. To avoid this, try to make sure all documentation is up to date.
Proof of address
You'll need two documents as proof of address. These can be a bank statement, utility bill, council tax bill or credit card statement. All of these documents must be dated within the last three months - older documents will not be accepted.
You should check that any documentation you provide has your name spelt correctly and consistently. Anything addressed to 'Steven' rather than 'Stephen', for instance, is unlikely to be accepted as evidence. The same applies if you changed your surname after getting married.
Bank and credit card statements
You'll also need to provide details of your outgoings, with bank and credit card statements from the last three to six months, any car finance or hire purchase agreements, details of any loans, plus a list of other regular payments and expenditure like travel or childcare.
Your bank statements should also show proof of how you've built up your deposit. Lenders may ask you to explain what they consider to be any unusual transactions, and evidence will be needed to back those up. If you've been given the deposit as a gift, you'll need a letter from whoever gave you the money.
Proof of employment
If you're in full-time employment, you may need your P60 from your employer and at least three months' worth of payslips.
If you're self-employed, it's a little more tricky. Generally speaking, you'll need details of your tax assessments and your accounts from the last three years, including the current tax year.
This may mean you'll have to submit your tax return earlier than usual if, say, you're applying for a mortgage in October but wouldn't usually submit your return until the following January.
To provide proof, you'll need statements from an accountant, tax return form SA302, plus supporting information such as bank statements and receipts.
- Find out more: mortgages for self-employed buyers
Step 3: Consider getting a mortgage agreement in principle (AIP)
Once you've found a mortgage deal that suits your circumstances, you might want to get an agreement in principle, also referred to as a decision in principle or DIP.
As the name suggests, it involves a lender agreeing 'in principle' to give you a mortgage, subject to final checks and approval of the property you intend to buy.
Getting a decision in principle usually involves a credit check, so we'd advise only doing this when formally applying for the mortgage, or if an estate agent asks for one to check you're a credible buyer.
If you experience the latter, try to obtain the decision in principle with a lender who runs a soft credit check, as it's best to keep the number of hard credit checks to a minimum. Your broker can help you with this.
Each lender is different, but a decision in principle will typically last for six months. If your property search takes longer than you planned, you may need to get a new decision in principle.
Step 4: Make a formal mortgage application
Once you've had your offer on a property accepted, you should formally apply for a mortgage.
If you're using a mortgage broker, they will arrange this for you.
The mortgage lender will then conduct a valuation on the property you intend to buy. This confirms to them that the property is worth roughly what you intend to pay for it.
The lender will also do a thorough check of the paperwork you've provided and your credit record. This search will appear on your credit file.
If a lender turns you down at this stage, it's worth trying to find out why, and potentially waiting a while before applying to another lender. Making several mortgage applications very close together could significantly damage your credit score.
Step 5: Wait for your formal mortgage offer
If a lender is happy with your application, it will make you a formal mortgage offer. Mortgage offers are usually valid for six months, whereas remortgage offers are typically only valid for three months (this varies between lenders).
Generally, you should expect to receive your mortgage offer within four weeks of applying.
The process could take longer if there's an issue with the valuation, the lender is busier than usual, additional information or documents are needed, or if your application is particularly complicated.
Once you have a formal mortgage offer, your conveyancer will arrange for the mortgage funds to be transferred from your mortgage lender to the person you are buying the property from on the day of completion.
- Find out more: mortgage lender reviews