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A mortgage is a loan used to purchase a property, the loan is secured against the property and the mortgage lender will have “first charge” on the property. This means that should you be unable to repay the loan, the property could be at risk. 

Depending on your circumstances and amount of deposit or equity available, lenders will offer 4.5 times to 5.5 times your annual income subject to an affordability assessment. 

Generally if you are employed, lenders will look at your last 3 months payslips and P60, if you have a straightforward basic income. Additional documents may need to be provided for complex incomes such as overtime, bonus and commission. 

 

If you are self-employed and are a sole trader, you will need your personal tax calculations which will show your profit from self-employment, these are sometimes referred to as your SA302’s. 

 

If you are a limited company director, you will need your limited company accounts which will show your operating profit before and after taxation, along with your directors remuneration and your personal tax calculations (SA302’s) which will show your income from employment and your dividends. 

 

These documents are generally required to be no more than 18 months old and you will need 1 or 2 years of either of these documents. 

This is the legal process which enables you to take ownership of a property, a solicitor will deal with all the aspects of this process acting for you and the lender, to ensure the purchase is in your best interest and to deal with the exchange of contracts and funds. 

At DCR Financial Services ltd, we will ensure that a mortgage suits not only your budget requirements but also your personal circumstances and attitude to risk. Simply taking the mortgage that offers the lowest cost may not suit you in the long run, and could leave you in a worse position. 

This will occur after you have spoken to an advisor at DCR Financial Services ltd and they have discussed your requirements, they will then apply to the lender for a Decision in Principle, which will provide you with a document confirming the amount a lender is provisionally prepared to lend you. This will generally involve your income figures and a soft credit search (there are lenders who will perform a hard search), be wary of any Decision in Principle offered to you by a broker or lender who has not assessed your documentation as this could lead to big issues further on in the process. Your Decision in Principle certificate once obtained, can be provided to estate agents along with your proof of deposit as proof of funds which is generally required to accept an offer on a property. 

 

Once you have had an offer accepted on a property and we have all the relevant documents, they will then make the full mortgage application. At this stage a hard credit search will definitely be performed and lenders will request documentation around your income, expenditure and identification, different lenders have different requirements and time scales so this part of the process can range from a couple of days to weeks, a good advisor will have obtained all the documents required in advance of this and checked through them to anticipate any issues that may arise with the underwriters, this will speed up the process. Once all the lenders’ requirements are satisfied and any questions answered the case will move to the next stage. 

 

If your case is approved then the last outstanding check is the property valuation, this is generally a formality to check that the property is worth the price you have offered for it and is structurally sound. If you are trying to purchase an unusual property or one that requires improvements it is a good idea to point this out to us in advance to avoid disappointment after what could have been a long process by this point. 

 

If you are issued a mortgage offer after the above has been completed, this document will go to your solicitors and allow them to exchange contracts and release funds for completion. The document will be valid for 3-6 months depending on the lender to allow the solicitors time to complete their legal process, once this is done, the property is yours! If you are unlucky enough to have a purchase fall through at this stage, many lenders will allow you to switch the mortgage offer to another property without any further underwriting and will even sometimes offer a free additional valuation. 

 

It is important that throughout the mortgage application process you try as hard as possible not to have any major changes to your personal circumstances such as taking out credit, missing payment or changing jobs, if anything like this does occur you should contact us immediately.