When to apply for a mortgage

It can seem chicken and egg: you can’t buy a house without a mortgage, but you can’t get a mortgage until you're ready to buy a house. So when should you apply for a mortgage? We explain all

Angela Kerr Director, Editor

If you’re buying a house you’ll want to know when to apply for a mortgage. By starting the mortgage process as early as possible you’ll know your budget and be in a stronger position with sellers – so you’ll reduce the risk of losing your dream property. Read on for what to do and when.

When should I start applying for a mortgage?

When it comes to when to apply for a mortgage, the best advice is to start the process before you even start seriously looking for somewhere to buy. If you’re looking at properties before starting the mortgage process, you’ve left it too late.

There are a number of reasons to begin the mortgage process before you start viewing properties or putting in an offer: 

• You’ll know your budget. You need to find out for sure how much you can afford. This is particularly important if you’re in a more complex financial position, such as being self-employed. Many home buyers end up losing a property because they couldn’t borrow as much as they thought. Read on for information on working out your budget.
• If you have your finances in place, you’ll be at an advantage compared to rival buyers who do not have a mortgage in principle (read on for more information on these). Most estate agents and their home selling clients will expect you to have a mortgage in principle when you make an offer.
• If you are thinking about buying jointly with anyone (e.g a partner or parent) or buying with a friend, then this will affect the sort of mortgage you can get. And, how much you can borrow – so you should sort this out before you start looking.
• Starting the mortgage process early will help to avoid delays and problems with your mortgage. The secret to smooth home buying is to reduce the surprises as much as possible. See our guide on How long it takes to get a mortgage?  

What to do before you apply for a mortgage

To maximise your chances of your mortgage being accepted and your house purchase being successful there is important work to do in the months before you apply for a mortgage.

1. Get mortgage ready

In the months running up to when to apply for a mortgage, you’ll want to make sure your finances are in good order. So make sure your credit rating is as good as it can be to make a successful mortgage application. And check if you can give your credit rating a boost, read our guide 11 tips to improve your credit score for a mortgage.

2. Work out your budget

Whether you’re looking to buy your first home or you’re moving house, you’ll want to know what your budget is before you start house-hunting. You’ll usually need a deposit of at least 5% to get a mortgage, although the bigger your deposit, the more deals you’ll get access to and often better rates too. So as a starting point, you need to find out for sure how much you can afford.

Using a mortgage calculator will give you an indication of how much you’re likely to be able to borrow but it’s advisable to speak to a fee-free mortgage broker too. They’ll outline what your options are likely to be and how much you’re likely to be able to borrow on a mortgage. And you can stay up to date on the best mortgage rates available each month in our best mortgage rates guide and our first time buyer mortgage rates guide.

3. Consider the type of mortgage you need

Think about what type of mortgage you’d like to take out; would you prefer a fixed deal so you have certainty on your repayment amounts or would you prefer a tracker deal, hoping it will be cheaper overall? You won’t need to commit now but considering your options in advance means you’ll be able to make a faster decision when it comes to choosing the mortgage you want to take out. A mortgage broker will run through the pros and cons of each mortgage type with you to help you make an informed choice.

4. Do you want to buy using a government scheme?

If you’re buying a house, it’s a good idea to explore whether you want to use a government scheme like shared ownership or First Homes scheme to buy a home well in advance of when you need to apply for a mortgage. Or you may want to use the privately run Deposit Unlock scheme. This helps first time buyers and home movers buy a new build home from a participating house builder with a mortgage from a participating lender. So do your research ASAP.

5. Prepare your documents for your mortgage application

When you apply for a mortgage you’ll need to provide documents like proof of earnings: If you’re employed, you’ll usually need to show your payslips from the last three months and your P60, while if you’re self-employed, you’ll usually need your last two years’ SA302s and your tax year overviews for those years too. Plus you’ll need to show bank statements and proof of ID and your current address. So make sure you have these to hand to avoid delays when you need to apply for a mortgage.

With our award winning mortgage partners at L&C, you can start the process of searching for mortgages and best buys online and speak to an adviser for fee-free expert advice

Step-by-step guide to applying for a mortgage

Step 1 – Shop around for the best mortgage

Once you’ve worked out your budget and know what type of mortgage you need, it’s time to shop around for the best mortgage. Using a fee-free broker can help you with this, not only will they be able to search for the best mortgage for you but they’ll also be able to match you with a lender that’s most likely to accept your application. And they’ll often get access to deals that are only available via brokers.

When you’re looking at deals, while the rate is important bear in mind, the mortgage fees and costs can make a significant difference to what you end up paying. Another benefit of using a mortgage broker is they’ll do all the calculations for you.

Next, shortlist two or three deals that you like the look of, and that seem suitable.

Step 2 – Get your Mortgage Agreement in Principle

While you can’t make a full mortgage application until you’ve had an offer accepted on a property, you can get a “mortgage in principle” (sometimes called an agreement in principle) and it’s advisable to do this before you start house-hunting. A mortgage in principle is a statement from a lender on how much they would lend you ‘in principle’ after you have supplied them with the evidence they need of income etc. They offer this in the hope that you will use them as your lender once you find the property you want to buy. And these can be helpful to show to estate agents when you’re house-hunting.

To apply for a mortgage in principle:

• You should be prepared to give information about your income and expenditure.
• The lender will run a series of initial credit checks to see whether you are likely to meet their eligibility criteria. Do not be tempted to overstate your income as you will have to evidence this and it will only delay your application and downgrade the amount you can actually borrow.
• Lenders will either do what’s known as a hard credit search, which is when the search is recorded on your credit file. Multiple searches over a short period can be seen by lenders as a sign that you’re desperate for credit, which makes you a less attractive prospect and could impact your ability to get a mortgage. So beware of doing too many hard searches. However, some lenders will do a ‘soft’ credit search and this won’t be recorded on your credit file.

Arrange your mortgage agreement in principle today with our award winning mortgage partners at L&C

Step 3 – Once your offer is accepted, make your full mortgage application

Once you’ve had your offer on a house accepted, now is when to apply for a mortgage. If you already have a mortgage in principle, you will have already covered much of the detail in the mortgage application. You will have to fill out a form and provide evidence of your income, identity, current address.

Your lender will perform a full credit check on you to ensure you they’re satisfied by your credit history and ensure you have paid your debts off in the past. They may also get references from your bank and employer. And they’ll perform affordablility checks too.

The lender will also require a mortgage valuation of the property you are about to buy and it will instruct a surveyor to do the valuation on its behalf. The price of the valuation depends upon the value of the house being surveyed; some lenders will insist you pay for the valuation while others will sometimes pay these fees for you, particularly if they are trying to attract you as a new customer.

Some will be prepared simply to add these fees to the total for the mortgage, so you pay them off over time. While brokers and lenders should tell you what the fees are upfront, ask so you are fully aware of all the costs and don’t get any nasty surprises. Read more in our guide Mortgage valuations explained. Note that the mortgage valuation is for the benefit of the lender and is not a survey covering the condition of the property you are about to buy. See What sort of survey should I have?

Step 4 – Wait for your formal mortgage offer

Providing the lender is happy with your mortgage application, it will make you a formal mortgage offer. If you’re buying a house, mortgage offers are usually valid for 6 months and if you’re remortgaging, mortgage offers are usually valid for 3 months. This varies by lender though so always check. You’ll usually get your mortgage offer within 2-4 weeks.

If you accept the mortgage offer, your conveyancer will contact your lender and ask them to release the mortgage funds in time for completion. The lender will send the money to your conveyancer, who’ll then send it on to the seller’s conveyancer. Once that has happened, you can officially complete the property purchase and become the legal owner of your new home.

What could delay my mortgage application?

It may take longer if there’s an issue with the mortgage valuation, if additional information is needed, or if your application is particularly complicated. Find out more information in our guide How long does it take to get a mortgage.

Can my mortgage application be rejected after a mortgage in principle?

Yes. Some buyers may be given a mortgage agreement in principle and then later find that their mortgage application has been declined. Reasons for this include if a deeper credit search reveals something concerning, or if you fail to meet the eligibility criteria set by the mortgage underwriters. While this can be incredibly frustrating, it’s important to remain calm and find out why you were rejected.

If you can resolve the issue, you will be able to re-apply with the same lender. However, if you can’t fix the problem then you may need to go through the process again, which can put your house purchase at risk. Read more about what to do if your mortgage application is declined.

Can my mortgage be declined after valuation?

Yes. A lender gets a mortgage valuation carried out to make sure the property is adequate security for the loan. In some cases, the surveyor will ‘down value’ the property; this means the surveyor will value the property at a lower price than the buyer has agreed to buy. If this happens, the lender may say it will lend you a lower amount. Alternatively, with down valuations your lender may decide the risk is too high and withdraw the mortgage. This means you’ll lose the house unless your mortgage broker can find another lender that will be happy to support your purchase. For more advice, see our guide to down valuations and what you should do.

Mistakes to avoid when applying for a mortgage

When you apply for a mortgage there are some pitfalls to avoid including:

• When to apply for a mortgage – Don’t apply without knowing which lenders will accept you: Each lender has different lending criteria and knowing which is most likely to accept your application is crucial. An easy way to find out is to get expert advice from a fee-free mortgage broker.
• Don’t apply for credit before applying for a mortgage: Each time you apply for any type of credit it’s marked on your credit file. And by making multiple applications in a short period of time can be a red flag to lenders. In the run up to when to apply for a mortgage, ideally try not to apply for any other type of credit.
• Being disorganised: There are lots of documents you’ll need when you apply for a mortgage so make sure you have them to hand and also that you send the correct documents too.

When to apply for a mortgage if I’m remortgaging?

If you’re on a fixed deal, it’s a good idea to start shopping around for a new deal about 6 months before it’s due to end. Lenders’ offers usually last 3-6 months, so while you may not get the full choice if you start looking 6 months in advance, you can secure a rate and then keep looking in case a better deal comes up.

There may be circumstances where you want to remortgage within your current deal, such as if you’re on a variable rate mortgage and you want to fix or if you want to remortgage to free up cash for a major expense, such as a home improvement project you want to fund or you want to pay for measures to improve your home’s energy efficiency. However, if you do this, you may have fees to pay such as an early repayment charge, and these can be substantial so make sure you check the details carefully first.

For more information read our guide on How to remortgage.

3 steps to getting a mortgage: video

Frequently Asked Questions