When you first meet your mortgage adviser, they will complete what is known as a factfind. This is a whole series of questions about you, where you live, who you live with, where you work, How much you earn and details of any credit commitments you already have. They would also need to know how much your current property is worth.
Sourcing and Affordability
One of the biggest stumbling blocks that remortgage clients come across is the change and tightening up of lending criteria particularly since the credit crunch. The adviser will be able to confirm if you are able to remortgage to an alternative lender with your current income to debt ratio. If you wish to release some of the equity within your house, again this will be reviewed inline with current criteria. It may be that you are able to change to a more competitive rate but stay with your existing lender (Rate Switch). This is particularly useful if you circumstances have changed as the credit checking can be less stringent.
Your mortgage adviser will be able to give you an idea of how much you can borrow based on the information you have supplied above and by using our mortgage sourcing tools. This figure would be subject to a credit check.
Your mortgage adviser will also complete an affordability check with the most suitable lender for you. This is the process of completing a very basic online form, showing your age, salary/income and outgoings. The mortgage lenders online calculators then deem them mortgage loan affordable or not.
Decision in Principle (DIP)
Once we have established how much you are able to borrow, the mortgage adviser will complete a Decision in Principle. This provides the lender with much more detail about you and your current situation. If it is agreed, this means that the mortgage lender has approved your loan amount for the term stated subject to you being able to provide documents to support the information given. i.e Payslips, proof of deposit.
Full Mortgage Application
Now it’s time for the mortgage adviser to complete the Full Mortgage Application. Converting the DIP into a Full Mortgage Application, is simply adding the meat to the bones so to speak and provides the mortgage lender with the full picture.
At this stage your mortgage adviser will supply all of the supporting documents to the mortgage lender, these will vary but usually;
- 3 months payslips or 3 years accounts if you are self-employed
- 3 months bank statements, showing the salary credits
- Evidence of your address & identification (usually Passport, Driving Licence & Utility Bill)
Once the mortgage lender has your application and all the documents they have asked for they will make an underwriting assessment of your case. This can take up to 2-3 weeks.
The Mortgage lender will instruct a surveyor to visit the property, they will complete a valuation and assess if they deem the property to be suitable security for the mortgage lender. A basic mortgage valuation is often free for remortgage clients but you should be prepared to pay up to £300 depending upon the lender. If your Loan to Value is particularly low it may be that some lenders complete what is known as a desk top valuation. Whereby it is not necessary for a surveyor to visit the property.
Final Assessment & Offer
It usually takes about 48 hours for the valuation to be received by the mortgage lender at which point the underwriters will check the valuation and that the valuer has no negative comments, your application will be passed for Formal Offer. This is the document that allows you to officially move to the legal stage of the process. It’s worth noting that by now you may well be 4-5 weeks down the line.
Legals and Completion
Remortgages are usually handled by large firms of conveyancers, known as Panel Solicitors. You won’t need to meet with them, they will in most cases communicate with you by post or email. It’s worth noting that it can take 2-3 weeks to complete this work and possibly longer if you are remortgaging a flat. Once all of the above has been satisfied, they will agree a date for completion (when your mortgage will move across to the new lender). They will take into account any financial penalties that may apply on leaving your existing lender and will time it for when these end.
The Financial Conduct Authority does not regulate some forms of buy to let mortgages.