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The Mortgage Application Process Explained

Navigating the mortgage application process can seem daunting, especially if you're a first-time buyer. However, understanding each step can help demystify the process and ensure you’re well-prepared. This article will walk you through the key stages of securing a mortgage, from obtaining an Agreement in Principle (AIP) to the final step of exchanging contracts and completing your property purchase.


Agreement in Principle (AIP)

The mortgage application process typically begins with obtaining an Agreement in Principle (AIP), also known as a Decision in Principle (DIP) or Approval in Principle. An AIP gives you an indication of how much you can borrow from a lender based on the financial information you provide and your credit check. It’s not a guarantee of a mortgage but shows sellers and estate agents that you’re a serious buyer.

Person with pencil tapping on a calculator



Three Keys Mortgages can help you obtain an AIP, and before we do so, we can establish the amounts different lenders might be willing to lend you, to ensure we obtain the AIP from the best lender. An AIP is usually valid between 30 and 90 days, depending on the lender, after which time you will need to reapply for an AIP. It’s advisable to get an AIP before you start your property search, as estate agents often request one to confirm you’re a committed buyer.





What You Need for an AIP

To obtain an AIP, you'll need to provide the following information:

  • Personal details (name, date of birth)

  • Addresses for the past three years

  • Income details and monthly outgoings


Lenders will conduct a credit check to assess your suitability. This could be a hard or soft credit check, which may or may not impact your credit score.


Find a Property

With a Decision in Principle in hand, you’re ready to start house hunting in earnest. Use online property portals like Rightmove and Zoopla, attend auctions, or explore off-market opportunities to find suitable properties. Ensure you avoid common mistakes like overlooking hidden costs or failing to account for necessary repairs. For example, a property might seem perfect but could require significant roof repairs costing thousands of pounds. Having a property survey is always a good idea.


Lines of Townhouses



From AIP to Mortgage Application

Once you’ve found a property and had your offer accepted, the next step is to turn your AIP into a formal mortgage offer by submitting a mortgage application. This process typically takes a couple of weeks but could be longer depending on your circumstances.

The lender will conduct detailed checks on your finances, including verifying your income, reviewing your credit history, and assessing the property’s value through a mortgage valuation. Ensuring all your documents are in order can help speed up this process.


Mortgage Valuation

A mortgage valuation is an assessment conducted by the lender to determine whether the property is worth the amount you’re planning to pay. This valuation also helps the lender calculate the loan-to-value (LTV) ratio, which is crucial in determining the mortgage rates available to you. A lower LTV typically means more favourable mortgage rates.


It’s important to note that a mortgage valuation is for the lender’s benefit, not yours. It’s different from a property valuation done by estate agents or a home survey you might commission to assess the property’s condition. In some cases, the lender may offer a free valuation, but if not, you will need to cover the cost. If you do plan to instruct a private survey, this is the time to do it. If you need any advice, give us a call and we can talk you through it.


Mortgage Underwriting

Mortgage underwriting is the process by which a lender decides whether to approve or decline your mortgage application. The underwriter assesses the risk involved in lending to you and determines whether it falls within the lender’s acceptable range.


This process involves several components:

  • High-level checks: Ensuring you meet the lender’s basic criteria, such as age, employment status, income requirements, and legal residency.

  • Credit checks: Assessing your creditworthiness based on reports from major credit agencies.

  • Affordability checks: Evaluating your income, outgoings, and debt-to-income ratio.

  • Property checks: Determining whether the property is suitable as collateral.

  • Fraud and money laundering checks: Verifying the legitimacy of the information and funds you’ve provided.


Underwriting can be completed automatically through algorithms or manually by an underwriter for more complex cases. While automatic underwriting is quick, manual underwriting may take a few hours to a few days, depending on the complexity of your case.

Contract with a pen


Exchange of Contracts to Completion

Once your mortgage offer is secured and your solicitor or licensed conveyancer is satisfied with the property’s legal standing, you’re ready to exchange contracts. This is a critical stage where the purchase becomes legally binding.


During the exchange of contracts:

  • Your solicitor will exchange contracts with the seller’s conveyancer.

  • You’ll hand over your deposit.

  • Buildings insurance needs to be in place at this point, as you’re now legally committed to the purchase.


A completion date will be agreed upon during the exchange, which is typically set for two weeks after the exchange but can vary depending on circumstances. On the completion date, you’ll receive the keys to your new home.


How Three Keys Mortgages Can Assist

At Three Keys Mortgages, we understand that navigating the mortgage process can be overwhelming. Our team of experienced mortgage advisers is here to help you every step of the way. We can assist you in understanding the different types of mortgages available and finding the one that best suits your needs. We will guide you through the Decision in Principle process, help you gather the necessary documentation, and ensure your application is complete and accurate.


We work with a wide range of lenders to find you the best mortgage deals and rates. Our advisers will support you through the entire application process, from house hunting and making an offer to loan processing, underwriting, and completion. With our expertise and personalised service, you can confidently navigate the mortgage application process and move closer to owning your dream home.





Understanding the mortgage application process and preparing adequately can significantly enhance your chances of securing a mortgage. By following this guide and working with Three Keys Mortgages, you can confidently navigate the mortgage application process and move closer to owning your dream home.


 
 
 

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CONTACT

Three Keys Mortgages

Midsummer Court

314 Midsummer Blvd

Milton Keynes

MK9 2UB

0333 339 7301

info@3keysmortgages.co.uk

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Three Keys Mortgage Consultants is a trading name of Craig Chavez who is a registered individual of John Charcol Limited, which is authorised and regulated by the Financial Conduct Authority.

 

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