For first-time buyers, the mortgage application process can seem like a journey into the unknown. You know there’s a lot to do, but what do you have to do, when do you have to do it, and why?

We’re here to help. This article walks you through the steps needed to get a mortgage, from the early prep to the day you get the keys. 

Preparing for your mortgage application

To make the whole mortgage application process smoother and quicker in the long run, it’s a good idea to get your ducks in a row as soon as possible. 

Here are four questions to answer before you start:

1. What’s your budget?

First things first: work out what your budget is. Your budget is made up of two things - the amount you need to save for a deposit and what you need to borrow (your mortgage). Together, these will let you estimate the property price you can afford. 

  • Your deposit. This is the lump sum you’ll use as a down payment. Many lenders will look for a minimum of 10% of the value of the property as a deposit. However, there are schemes available where you can get a mortgage with just a 5% deposit. You can read more about 95% LTV mortgages here.

  • How much you’re able to borrow. This is based on your income. Usually, lenders will lend a maximum of 4.5 times your annual income. So, for example, if you earn £30,000, you could borrow up to £135,000. 

To work out the maximum amount you can borrow – and the maximum property value you could afford – punch your numbers into our mortgage calculator

2. Are you mortgage-ready?

In other words, are you in a strong position personally, professionally, and financially to get a mortgage application across the finish line? 

Here’s what most lenders will ask, so have your answers ready.

  • Is your credit score up to scratch? Mortgage lenders use agencies like Experian, Equifax, and TransUnion to make sure you have a solid credit history. Before you start the mortgage application process, check your score in the same places.

    You can improve your credit score by:
  • Being on the electoral register
  • Paying back any loans, debts, or overdrafts
  • Getting a credit card and repaying it on time, to show credit companies that you’re a reliable borrower

Find out more about improving your credit.

  • Do you have a steady income? Lenders want proof that you have an income you can rely on. You’ll typically need to provide your last 3 months payslips when you apply.

  • Have you recently changed jobs or started a business? Lenders don’t like risk or uncertainty, so usually won’t want to lend you money while you’re still in your probationary period at work. You may need to wait a few months, to show them that your job is a sure thing.

    If you’ve recently become self-employed, lenders will want to see detailed evidence of your income. That often means sending 2-3 years of self-assessment tax returns along with your application. Learn more about the self-employed mortgage process here.

  • Have you been on furlough or the Self-Employment Income Support Scheme? If you’ve received government wage support throughout the pandemic, it could affect how much you can borrow in the short term.

  • Have you spent big recently? In addition to your income, lenders will want to see your outgoings. A major purchase (like a car) could impact how much they’re willing to lend you, because they may be worried you won’t be able to afford both mortgage and other repayments.

3. Do you have all your documents?

Pro tip: a bit of admin now will save you from a frantic mid-application passport hunt later. Gather everything you need to apply for a mortgage and keep it together in a drawer or folder. Applications can differ from one lender to the next, but you’ll almost certainly be asked for:

  • ID and proof of address. Passport and driving licence, or a visa or residence permit.

  • Proof of income. That’s your payslips and P60s if you’re employed. If you’re self-employed, you’ll need 2-3 years of tax returns and business accounts (though some self-employed mortgages will ask for less).

  • Bank statements. Lenders will want to run the numbers to work out what you can afford to repay.

4. Go it alone or use a mortgage broker?

Most first-time buyers use a mortgage broker to guide them through the application process. But you can go it alone and deal directly with the lender yourself - totally your call.

Mortgage brokers can help you:

  • Choose the right mortgage deal. There are thousands of deals out there, from lots of different lenders. A broker can help you navigate all of your options.

  • Understand all the conditions and extra fees. Certain mortgage deals will include processing fees and extra charges for early repayment. A broker can talk you through all of these, and explain how much a deal will cost you, down to the penny.

  • Make sure your application is perfect. Different lenders have different requirements. A broker can help you find the perfect fit for your circumstances.

Habito is a mortgage broker with a twist: we’re exclusively online, and we’re totally free. That means you can do the entire mortgage application process from the comfort of your sofa. Get started here.

The mortgage application process – step by step

Fully prepared? Then we’re good to go. Here are the key steps in the mortgage application process.

Step one: get a mortgage in principle

A mortgage in principle (MIP) is a shiny certificate from a lender or broker that shows how much you could borrow. It takes into account your earnings, the size of your deposit, and your outgoings. It’s no guarantee, but it gives you a pretty good idea.

You can also take it to property viewings to show you’re a serious buyer.

How long does a mortgage in principle take? It can be done and dusted in a matter of minutes. Get your free MIP here.

Step two: find a property and make an offer

Now for the exciting part – househunting. Once you’ve found a place that ticks your boxes, it’s time to make an offer. And armed with your MIP, sellers will know you mean business.

How long does this step take? As long as it takes to find the property you love! Your MIP won’t expire, so there’s no rush. However, if there are lots of people interested in the same property, the process of making an offer could take a couple of weeks (sometimes longer). The seller will tell you if they’ve accepted your offer. 

Step three: get an agreement in principle

An agreement in principle (AIP) is the first part of your formal mortgage application. It’s like a mortgage in principle, only more detailed.

Your AIP will tell you that a lender is happy to lend you a specific amount for a particular property, using the information you provided. This includes:

  • Your income and expenditure. Your payslips, tax returns, and bank statements will be useful here.
  • The property details. Your offer and the property value.
  • A credit check. It could be a soft check, which won’t impact your credit score. Or a hard one, which might. Your lender will tell you before they do it.

How long does this step take? For you, submitting all of the documents can take as little as 20 minutes. However, a lender might take 48 hours to a week to process your details and get back to you.

What happens if my mortgage approval is declined? Ask your lender why and try to solve the problem before you reapply. Your broker can help. Find out more on what to do if your mortgage is declined.

Step four: talk to a solicitor or conveyancer

If you have an agreement in principle, it’s time to talk to a solicitor. You’ll need one to exchange – legally transfer ownership of the property to you. A solicitor will check that:

  • The property is worth what you’re paying
  • There are no structural faults or legal issues
  • You can afford it and you know your legal responsibilities.

A solicitor will also formally seal the deal between you and the seller once your mortgage is confirmed.

How long does this step take? As long as it takes you to search and choose a solicitor! You might have a solicitor in mind already. If not, we can help - check out Habito Plus.

Step five: make the formal application

Almost there. The next step is to get your documents together and send them to your mortgage lender.

At this point, the process is no longer in your hands. And, with your formal application submitted, you can sit back and wait while your lender is busy checking all of the important details.

How long does it take to process a mortgage application? It generally takes around 4 to 6 weeks for the lender to process the mortgage application at this stage. So, hold tight.

What happens if my application is declined at this stage? If your application is declined after your formal application, you’ll need to find out why. It could be because:

  • The lender discovered something about your financial history you hadn’t told them about, like a bankruptcy, or an unpaid mortgage.
  • There’s a problem with the property. For example, it’s not worth the price you’ve offered for it.

A rejected mortgage application is tough. If it’s a problem with your eligibility, you should fix it before you reapply. If you’re using a mortgage broker, they can help you regroup and prepare another mortgage application, either with the same or another lender.

Last step: exchange contracts – and move in!

With an official mortgage offer in your pocket from your lender, it’s time to exchange contracts.

That’s when your solicitor and the seller’s solicitor agree that all the paperwork looks good, and tell the lender to go ahead and send the mortgage money to the seller.

Once that’s done, the property is legally yours, and you can start looking forward to move-in day. That’s officially a wrap on the mortgage process for now.