How Long From Valuation To Mortgage Offer
Depending on how busy the lenders surveyors are it can take a few days or more than a week to get your mortgage offer once the mortgage valuation has been carried out.
If the lender is happy with your personal financial situation, and the outcome of the valuation survey, they will make you a formal mortgage offer.
Forbearance Ends With A Payment Plan Not A Lump
Homeowners who receive COVID hardship forbearance are not required to repay their paused payments in a lump sum once the forbearance period ends. You can talk with your mortgage servicer, or start with a HUD-approved housing counseling agency, to discuss a repayment plan that works for your situation.
Get On The Electoral Register
This may seem odd, but lenders will always check whether you’re registered to vote at your current address. It’s one of the main ways that they check your identity and where you live, and is a vital step in improving your application.
You can ask to be added to the electoral register at any time by contacting your local council.
If you’re concerned about privacy, make sure you’re only added to the electoral register that is not publicly viewable. If you are on the ‘open’ register, your details will be available to the public.
What To Do If A Lender Refuses Your Mortgage Application
A lender could refuse you for a mortgage even if youve been preapproved.
Before a lender approves your loan, theyll verify that the property you want meets certain standards. These standards will vary from lender to lender.
Each lender sets their own lending guidelines and policies. A lender may refuse to grant you a mortgage if you have a poor credit history. There may be other reasons. If you dont get a mortgage, ask your lender about other options available to you.
Other options may include:
- approving you for a lower mortgage amount
- charging you a higher interest rate on the mortgage
- requiring that you provide a larger down payment
- requiring that someone co-sign with you on the mortgage
How Does An Agreement In Principle Differ From A Mortgage Offer
An Agreement in Principle, also known as a ‘Decision in Principle’ or ‘Mortgage Promise’, is useful if you havent found a property you want to buy but would like to know how much you could borrow. All we need is a few personal details about you and anyone else who will be named on the mortgage. Then well contact a credit reference agency for a credit search and give you a credit score. If you reach our pass mark, well give you a certificate, so that you can show the seller you can get a loan.
An Agreement in Principle is subject to us performing a number of additional checks and so is not a guarantee we will be able to lend you the money, for this you need a mortgage offer.
A mortgage offer is issued by a lender once your mortgage application has been received and the necessary checks, such as the property valuation and confirmation of your details, have been carried out. It sets out the terms under which the lender is prepared to offer you a loan.
Your Mortgage Application Doesnt Have To Be Perfect
Sure, youll have the biggest home buying budget if you have no other debts and a large salary.
But those things arent required. As a home buyer, its all about starting where you are now.
Figure out what makes sense for you based on your own salary and needs, rather than aiming for a budget based on a rule of thumb.
Many people find that when they approach it this way, home buying is more attainable than they ever thought possible.
Can I Declare Any Additional Income On A Mortgage Application
In addition to a basic wage, many employees have the opportunity to earn additional income. Luckily there are lenders who offer mortgages with bonuses, overtime and commission factored in. You can also receive financial allowances for items such as a car, a house, or for relocation purposes, and there are mortgage providers who will take this into account, too.
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The Advantages Of Applying With Multiple Lenders
Fact: Nearly one out of four home purchase applications are denied.
If 25 percent of mortgage applications are turned down, a little insurance could translate to a lot of peace of mind. This is especially true if you have less-than-perfect credit.
Another reason to shop around is that mortgage programs, closing costs, interest rates and service can vary significantly from one lender to the next. Obtaining more than one loan approval allows you to test the waters with lenders on these variables.
It doesnt hurt to tell lenders that you are shopping around. In fact, you should tell them.
Mortgage competition is alive and well in our current economy. If you are at good credit risk, lenders may be more likely to compete for your business.
Informing lenders that youre shopping and comparing will typically result in the lender being more inclined to put their best foot forward from the very beginning.
Calculating The Maximum Mortgage Amount
When calculating the maximum amount you can borrow on a multiple-person mortgage, some mortgage lenders will only consider only an affordability assessment of the two highest income earners and cap the loan amount based on a multiple of their combined salaries.
Other lenders might be happy to apply the income multiple to three applicants and a handful of specialist lenders can consider the income of four applicants on the same mortgage.
Most lenders have a cap on lending at 4.5 times income, although there are a few who may go as high as 5 or even 6 times combined income. However, when you reach 5-6 times income level, most lenders are less likely to consider all the applicants incomes.
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How Your Mortgage Choices Can Affect Your Future
Mortgage lenders charge a penalty fee when you break your contract. This means, if you sell your home, you could owe the lender thousands of dollars in penalty fees.
You could also pay penalty fees if you pay off your mortgage early. Unless you plan on owning your home until you pay it in full, you may need flexibility on your mortgage.
Options related to mortgage flexibility include if your mortgage:
- is open or closed
Sort Your Paperwork To Speed Things Up
Lenders need proof of your income before they can offer mortgages, so it makes sense to get your paperwork together in advance. Sending all the paperwork in one batch speeds up the process as it reduces the chances of your application being reviewed by more people.
If your lender won’t accept PDFs, uploads or printed internet bank statements, you may need your bank to send you original copies. Ask for these a few weeks in advance in case you need to wait for the originals to arrive.
Your lender may want to see any or all of:
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Avoid Delays Fill Out The Application Form Correctly
Here are our top five tips for filling in the paperwork or online application. Even if you end up getting a broker to help you, its normal for you to be asked to check it first so make sure you:
DO state your income exactly. Dont round up.
DO give your FULL NAME even middle names are necessary.
DO declare ALL your debts.The lender will find them anyway and withholding the info can mean a quick decline.
DO get your three-year address history exactly right, including postcodes.
DO give honest answers when asked about how much you spend.
Buying As Tenants In Common
This is an alternative to buying as joint tenants and it involves buying a property with another person where both parties dont own equal portions of it and can decide what to do with their share if they die. If you get a joint mortgage with friends, most experts would recommend getting a Deed of Trust written up with the help of a solicitor, outlining who owns what between you.
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What Impact Will Deposit Source Have On A Multiple Applicant Mortgage
With a lot of lenders, deposits need to be from the people on the mortgage. If someone is gifting a deposit thats fine, but lenders can restrict who this is direct family are usually the only relationship that is widely accepted. Some lenders however, are happy with more distant relatives , business partners or friends, so you can have 3 people on a mortgage.
Lenders will allow gifted deposits from family members which you can add to your own savings and any contributions you might acquire from a Help to Buy scheme. Who the lender will approve of as a provider of a gifted deposit varies but follows a distinct pecking order.
Most lenders will accept a deposit gifted by parents, then in order of less likely relatives they will accept from:
- Extended family
- A few lenders consider gifted deposits from friends, though it is possible.
If someone is gifting a deposit and living in the property, without being on the mortgage, almost all lenders decline with a few specialists the exception.
Ask a quick question
We know everyone’s circumstances are different, that’s why we work with mortgage brokers who are experts in all different mortgage subjects.Ask us a question and we’ll get the best expert to help.
Register To Vote Or Your Chances Might Be Scuppered
This is a potential dealbreaker. While you can have a perfect credit score without being on the electoral roll, it’s very difficult to get a mortgage without it. Lenders use electoral roll data in identity checks .
Your credit file will say if you’re on the electoral roll or not, but you can also check with your local council. Do this as early as possible. While you can usually be added within a month, in late summer and early autumn it could take longer.
If you’re not on it, you can register on the electoral roll for free. If you’re not a UK, Irish or EU national and thus can’t get on the electoral roll to vote, then you can put a notice of correction on your file, saying you have other proofs of address and ID you can offer lenders .
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Applying For A Mortgage In 6 Months: What Should You Be Doing Now
In this article:
Even if youre not applying for a mortgage for another six months, there are still actions you should take now to prepare:
- Focus on your credit. Correct any credit reporting errors, improve your credit score by paying all bills on time, and dont open or close any credit accounts.
- Pay down debt and start saving. By reducing your debt and saving for a down payment and an emergency fund, youll be in a great position to apply for a mortgage.
- Get paperwork in order and be prepared. Make sure your bank statements, pay stubs, and tax documents are in good order in preparation for applying.
Not Matching The Lenders Profile
Lenders have different underwriting criteria and they take a number of factors into account when assessing your mortgage application. It could be based on a combination of age, income, employment status, the loan to value, property location.
An independent mortgage adviser has experience of the market and is likely to have a better idea of the underwriting criteria and suitability of different lenders.
Read more in our guide Mortgage advice: should you use a mortgage adviser?
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How Can I Speed Up My Mortgage Application
A mortgage broker can help speed up the mortgage process, because they are already familiar with the mortgage products on the market, including the specific criteria each lender looks for. This can considerably cut back on the time youll spend doing your own research and having to make appointments with or speak to individual lenders directly.
You can help speed up your mortgage application by having all the documents youll need handy and sending them through as soon as possible. Its also a good idea but not a stipulation to make a list of all your financial outgoings as well as your income because your broker/lender will want to know that youll find the mortgage affordable.
Do I Need A Mortgage In Principle
Having a mortgage in principle isnt compulsory, but there are several good reasons for getting one done.
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Bad Credit Mortgages With Multiple Applicants
Generally, mortgage applicants are as quick as the slowest wheel i.e. if one has bad credit and the other clean, the bad credit is still taken into account by the lender.
If, for example, you have three applicants on a mortgage and one of them has had credit issues. This means you may end up paying a slightly higher interest rate, depending on the severity and how recent the credit issues are. Interest rates and mortgage deals for those with credit issues looking to apply for a bad credit mortgage are extremely competitive currently, and many people are surprised by how attractive the rates are.
That said, some borrowers may still benefit from applying in sole name, particularly if issues are more severe and they are ineligible as a result.
As well as considering all of the multiple applicants credit scores, lenders will consider all of your incomes, your debt-to-income ratios and the size of deposit you are able to accumulate.
If one of your fellow applicants has bad credit, your overall credit score can be raised by others who have clean credit, though perhaps not enough to put you in a position for you all to borrow from a lender under the most favourable terms.
Choose A Lender And Commit
Time: 5 minutes
Youve compared lenders rates and fees. Now assess their responsiveness and trustworthiness. Think twice about anyone who makes you feel pressured, Burrage says. His advice: Go with someone you can trust.
Then contact the lender of your choice to say youre ready to proceed.
Most lenders will request money for a credit report and an appraisal .
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Borrow Up To 6 Times Your Salary If You Have No Other Debt
Take a look at two borrowers, whose profiles are identical except for their debt-to-income ratios.
*Home buying budgets estimated using The Mortgage Reportsmortgage calculator. Your own rate and budget will vary
In this scenario, Borrower One has been admirably prudent and has no ongoing debt.
Borrower Two, on the other hand, has a car payment and personal loan payment totaling $1,000 per month. This drastically affects how much they can borrow for a mortgage.
Note, both loans aim for a 36% DTI, which is typical for a conventional mortgage. However, many popular loans with a max DTI of 43% to 45%.
Its even possible to buy a home with a DTI of close to 50%. But many mainstream lenders wont approve such loans.
And remember, the higher your DTI, the higher your mortgage rate.
So its in your best interest to keep debts low and even pay some off if possible when youre shopping for a mortgage.