Applying for a Mortgage
Once you have found the ideal property for you and have an offer accepted, you’ll need to apply for your mortgage, get your solicitor involved to carry out all the legal aspects of the purchase, and look into insuring both your home and your income. As ever, First Mortgage advisors can take you through this every step of the way, but for an insight into the process, we’ve summarised the main steps in this section.
Completing a mortgage application
- Meeting 1 – get a decision in principle
At your first meeting, your advisor will ask you about your personal circumstances and expectations, such as:
- What sort of property would you like to buy?
- How much you can afford to spend on a new home?
They’ll take you through a budget planner to look at what you earn and what you spend, what deposit you have and your credit history.
Using all this information, they’ll find the best deal based on your individual needs. You’ll leave with a decision in principle – this is basically an assessment of what a lender is prepared to give you – so that you and any sellers know exactly how much you can spend on a property.
- You look for a property, we look for a mortgage
After your initial meeting, you and your advisor both start your searches – you for your home, they for the mortgage to buy it. As you are selling your home too, you’ll want to make sure that process is underway – or, even better, have sold your house already and be in a chain-free position to buy. Your advisor will search the market for the most suitable mortgage for your needs and send you recommendations.
- Meeting 2 – get a mortgage
Once you have found your property and had an offer accepted, it is time to apply for your mortgage. You can contact your mortgage advisor at any point in between meetings to ask for advice and help – all for free. You’ll need to bring several documents with you, a list of which will be sent to you well in advance of the meeting. At the meeting itself, your advisor will take you through the application process step-by-step. As they have researched the lender and prepared for the meeting, it should be a straightforward process and you’ll leave with a mortgage in place.
Preparing your documents – what you need to bring with you
After your first meeting with a First Mortgage advisor, you’ll be sent a letter detailing what you discussed. This is to make sure you are clear on everything and understand the ins and outs of the mortgage process. You’ll also be sent a list of documents to bring with you to your second appointment, when the advisor will take you through the mortgage application process itself. These will include:
– proof of your income from the last three months (payslips or business accounts, bank statements and income tax accounts)
– proof of identity, such as a passport or driving licence
– proof of address, such as a recent bill
Solicitors and surveys
In Scotland, you secure the services of a solicitor and surveyor early in the house buying process: before you make an offer on a property, in fact. Elsewhere, a solicitor and surveyor will get involved after an offer has been made and accepted. The differences account for why most offers on properties in Scotland are unconditional (as the research is already complete) while those in England, Wales and Northern Ireland are subject to survey or other conditions.
Whenever solicitors and surveyors get involved, this stage of the process is all about checking your property – its value, it condition and its paperwork. For the legal aspects, you need a solicitor, and for the practical aspects you need a surveyor.
All the legal work that happens between an offer being accepted, through the exchange of contracts and then the completion of the sale, is known as conveyancing. Any solicitor can offer these services, but its best to work with one that specialises in property, or comes recommended for its conveyancing work.
Solicitors, or conveyancers, complete all the legal tasks relevant to the purchase of a property. In Scotland, they make offers for property on your behalf and conduct searches on properties to make sure there are no planning or local issues that might affect its value. They can do this before you make an offer, although some solicitors will charge for these regardless of whether you are successful in your bid or not.
Solicitors also draw up and assess contracts, provide legal advice, deal with the Land Registry, sort out payment of Stamp Duty or Lands and Buildings Transaction Tax and oversee the transfer of cash to buy a house.
Surveyors help you find out about the condition of your property and, if they identify any problems, give you the evidence you need to renegotiate the sale price or ask the seller to fix the issues that have been found. Most surveyors offer three different kinds of survey:
- a condition report
- a Homebuyers report
- building survey
The HomeBuyers report tends to be the standard as it looks at both value and condition, but it really depends on the value and condition of the place you want to buy as to which works best.
In Scotland, the seller is obliged to prepare a Homebuyers Report and share it with you as a potential purchaser. You would also be advised to commission an additional survey before putting in an offer, to help you judge the offer you should make. However, there is a risk that you will commission a survey and then not win the bid on the house. There are several options for surveys, depending on the age and condition of your property and how much you want to spend.
Surveys – the different kinds and which to choose
Mortgage valuation survey
This is usually required by the lender to check that the property is worth what you are proposing to pay for it. They will request, you will pay for it. It won’t tell you anything about the condition of the property, just what it is worth.
This is the most basic ‘proper’ survey. It gives an overview of the property’s condition and highlights significant issues but doesn’t go into any detail or offer any guidance on how to address issues. This is generally suitable for relatively new properties.
This is a good halfway house between a simple condition report and a thorough building survey. It highlights any major problems and gives advice on repairs and maintenance. However, it only looks at the surface condition of the property – no lifting floorboards or moving furniture is involved. This is a good choice for properties in reasonable condition.
This is the most thorough survey there is and provides a comprehensive analysis of the structure and condition of the property. It lists defects and looks at recommended repairs and how much they might cost. It is detailed in that it will look at everything in the property, not just what’s on the surface. This is most suited to properties that are more than 50 years old or in poor condition.
Insuring your home and mortgage
Your First Mortgage advisor will take you through the range of insurance options that might help you look after your home and income. Pretty much all lenders insist on buildings insurance, which will pay out enough to rebuild your house should it be destroyed by fire, flood or subsidence, and will address lesser claims. For a more detailed look at how you can protect your home and money, see our Insurance section.
What do estate agents do?
Estate agents market and sell properties. They will also help you find a property if you discuss what you are looking for with them. They are a useful source of information about the local property market and the sorts of property that come on to the market. As well as selling and negotiating with buyers, they follow up on paperwork, keep tabs on the chain of sale (who’s sold and is moving and whether there are any hold ups) and work with solicitors to make sure sales happen.
Property Law Centre
First Mortgage offer a dedicated conveyancing service through our partner organisation Property Law Centre. Their advisors will appoint a specialist solicitor from a carefully selected panel of legal firms who will then manage the legal process for you, working closely with your First Mortgage advisor. They work for a fixed fee, agreed before you buy your house. There are no hidden costs and the fee does not change even if there was more work than anticipated in the purchase of your property. As part of the service, you will have access to real time tracking, allowing you to see updates on the progress of your property purchase.
Speak to you First Mortgage Advisor about the Property Law Centre and they will arrange for a solicitor to get in touch.