Get your paperwork organised
Lenders will need to see proof of income and identification before they can offer you a mortgage, so it makes sense to get your paperwork together in advance. Sending everything in one batch can help speed up the process as the lender should have all the information they need to hand.
Your lender may want to see any or all of:
• Your last three months’ bank statements
• Your last three months’ payslips
• Proof of bonuses/commission
• Your latest P60 tax form, showing income and tax paid
• Your last three years’ accounts or tax returns (if self-employed)
• Proof of deposit (e.g. latest 3 months’ savings account statements)
• ID documents (usually a passport or driving licence)
• Proof of address (e.g. utility bills or credit card bills)
• A gift letter; If you’re receiving help with your deposit, the lender will need a letter from the person providing the gift explaining that they won’t part own the home and that it’s not a loan.
Register on the electoral roll
This is the quickest and easiest part of preparing for a mortgage application. Being on the electoral roll at your current address is important because lenders often use the electoral roll data to help identify you, and being on the electoral roll will also help your credit score.
If you’re not currently registered you can join here.
Don’t apply for credit shortly before making a mortgage application
Try to avoid applying for credit in the three months before getting a mortgage – it could impact your credit score, and taking out new loans or increasing your credit card balances is likely to reduce the amount you can borrow. Some recommend at least a six-month gap, to be absolutely safe.
If you need to apply for credit, it’s unlikely that one application will hurt all that much, as long as it’s affordable. But if it’s a payday loan, some lenders will decline you for a mortgage if you’ve had one in the past year.
It’s also strongly advised not to take out any new credit between your mortgage offer being issued and completing on your new home. If you do so you will need to inform the lender, which could result in them changing the amount they’re prepared to lend you.
Manage your payments and spending
If you have an existing credit card or loan, it’s important you keep up with the minimum repayments and try not to get too close to your credit limit. Missed or defaulted payments, County Court Judgements (CCJs), payday loans, and clear betting patterns on your bank statements can all lower your chances of getting a mortgage.
Check your credit report before you apply
Lenders want to see that you’re able to manage your finances before they decide to offer you a mortgage. One way they do this is by checking your credit file to see if you have a good payment history.
Your credit file lists your current and previous credit cards, loans, overdrafts, mortgages, mobile phone and now some utility payments, going back over the last six years. There are three main credit reference agencies in the UK, and several companies offer ways for you to see your report and score for free. The three main agencies are
Experian – You can sign up for a 30 day free trial with them here
Equifax – Clearscore offer free access to your Equifax credit report – you can sign up here
TransUnion – TotallyMoney offer free access to your TransUnion credit report – you can sign up here
If you think your credit file information is wrong, you can raise a dispute to get it corrected. In the first instance try contacting the company that registered the error on your credit file, although some of the services above do offer the facility to query entries too.
Please be aware that by clicking onto the above links you are leaving the Cornerstone UK Mortgages website. Please note that Cornerstone UK Mortgages nor HL Partnership Limited are responsible for the accuracy of the information contained within the linked site(s) accessible from this page.
How long does a mortgage application take?
Many people decide to get a mortgage agreement in principle before they apply for a mortgage. Lenders will ask for some basic information and perform a credit search so they can come up with a figure that they would be able to lend ‘in principle’. This doesn’t, however, provide a guarantee that you’ll be offered a mortgage, but it can be useful to show estate agents that you’re serious about buying and may speed up your application once you’ve found a property you want to buy.
Completing the mortgage application itself shouldn’t take too long, typically a couple of hours, but you’ll need to make sure your finances are in order and you can find all the information you need. In order to assess your reliability as a borrower and how much you can borrow, lenders will want to know the following about you, and you’ll need to provide evidence to support your application.
• How much your outgoings are, including how much you spend on things like childcare, holidays, and pension contributions. You’ll need to produce bank statements showing what goes out of your account each month.
• What your income is, including any bonuses or overtime – the lender will want to see your payslips as proof, or your accounts if you are self-employed. This helps the lender to calculate what monthly payment you can afford.
• ID to prove your identity and current address
• Details of the property you want to buy
• Your estate agent’s and solicitor’s details.
How long does it take to get a mortgage offer?
Once the lender has reviewed all your information, performed a credit check, and doesn’t require anything more from you, they will then want to arrange a valuation of the property you are buying. This can sometimes take a couple of weeks or longer, as the surveyor will need to visit the property, write up their report and submit it to the lender. After the lender has reviewed the valuation and is happy with it, they should at that point be able to approve your application and formally offer you a mortgage. As a general rule, you can expect it to take between around 18-40 days for your application to be processed, but if your application is complex it could take longer.
What can you do to speed up your mortgage application?
Having documents to hand, getting them to your mortgage broker quickly, and communicating regularly with your solicitor and broker to push things along can all help speed up your mortgage application, so make sure you’re prepared before you start the process.
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How much deposit do I need to buy a house?
When it comes to putting down a deposit to buy a property, the more you can save up, the better.
Your mortgage deposit will normally need to be for at least 5% of the value of the property you are buying. So, for example, if you want to buy a home costing £250,000, you’d need to save up a minimum deposit of £12,500.
Ideally, however, you should aim to save more than 5%, as the bigger the deposit you can build up, the wider your choice of mortgage options will be. You’ll also benefit from lower and often better mortgage rates.
Can I get a mortgage with a gifted deposit?
Many first time buyers rely on the ‘Bank of Mum and Dad’ to gift them a deposit to get a mortgage. If you are buying a home using a gifted deposit, the lender may require confirmation that the person gifting the money is aware that they will not have any claim on the property, and that they do not expect their money back.
Although lenders are usually happy for family to gift deposits, they may be more reluctant to lend if the gift has come from a friend.
Mortgage types explained
All mortgage types work in the same basic way: you borrow money to buy a property over a set term, and pay interest on what you owe.
How much you pay back each month is determined not only by how much you’ve borrowed, and the rate of interest you’re paying, but also how long your mortgage term is, and whether you’ve opted for an interest-only or repayment mortgage.
Repayment versus interest-only mortgages
Most mortgages are arranged on a repayment basis, also known as a Capital and Interest mortgage. This means that every month you repay a portion of the capital you’ve borrowed, as well as a part of the interest you owe.
By the end of the mortgage term, assuming that you’ve made all of your payments, you will have repaid the original amount you borrowed, plus interest, and you will own your home outright. You can opt for a shorter or longer mortgage term depending on how much you can afford to pay each month.
Some mortgages however, are arranged on an interest-only basis. This means you repay the interest you owe each month, but not any of the capital you’ve borrowed. You only pay off the original amount you borrowed at the end of the mortgage term.
The advantage of an interest-only mortgage is that monthly payments will be much lower than with a repayment mortgage, but the downside is that you must be certain you’ll have saved up enough by the end of your mortgage term to repay the amount you borrowed.
To be eligible for an interest-only deal, you’ll need to be able to prove to the lender that you’ve got a savings plan in place to cover this.
What are the different types of mortgage?
Fixed rate mortgages
With a fixed rate mortgage, as the name suggests, you pay a fixed rate of interest for a set term, typically ranging from two to ten years, or sometimes even longer. This can provide valuable peace of mind, as your monthly mortgage payments will be the same every month, regardless of whether or not interest rates increase on the wider market.
The downside is that if interest rates fall, you will be locked into your fixed rate deal.
If you want to pay off your mortgage and switch to a new deal before your fixed rate comes to an end, there will usually be Early Repayment Charges (ERC’s) to pay.
After the fixed period finishes, you will normally move onto your lender’s Standard Variable Rate (SVR), which is likely to be more expensive. If your fixed rate deal is coming to an end in the next few months, it’s a good idea to start shopping around now.
Many lenders allow you to secure a new deal several months in advance, allowing you to switch across as soon as your current rate ends, and avoid moving to a higher SVR.
Variable rate mortgages
If you have a variable rate mortgage, this means that your monthly payments can go up or down over time.
Most lenders will have a Standard Variable Rate (SVR), which is the rate charged when any fixed, discounted or other type of mortgage deal comes to an end. There are usually no Early Repayment Charges (ERCs) if you want to switch away from your lender’s SVR.
There are several other types of variable rate mortgage available too. These are:
• Tracker mortgages
• Discounted rate mortgages
• Capped rate mortgages
Tracker mortgages
Tracker mortgages, as the name suggests, track a nominated interest rate (usually the Bank of England base rate), plus a set percentage, for a certain period of time. When the base rate goes up, your mortgage rate will rise by the same amount, and if the base rate falls, your rate will go down. Some lenders set a minimum rate below which your interest rate will never drop (known as a collar rate)but there’s usually no limit to how high it can go.
Discount rate mortgages
Discounted mortgages offer you a reduction from the lender’s Standard Variable Rate (SVR) for a certain period of time, typically two to five years. Mortgages with discounted rates can be some of the cheapest deals but, as they are linked to the SVR, your rate will go up and down when the SVR changes.
Capped rate mortgages
Like other variable rate mortgages, capped rates can go up or down over time, but there is a limit above which your interest rate cannot rise, known as the cap. This can provide reassurance that your repayments will never exceed a certain level, but you can still benefit when rates go down.
The additional security of this type of deal means that interest rates tend to be slightly higher than the best discounted or tracker rates. There will also usually be an Early Repayment Charge (ERC) if you pay off the mortgage in full and remortgage to another deal.
Other kinds of mortgage
Offset mortgages
An offset mortgage enables you to offset your savings against your mortgage, so that instead of earning interest on your savings, you are charged less interest on your mortgage debt. For example, if you have a mortgage of £100,000 and savings of £5,000, your mortgage interest is calculated on £95,000 for that month.
Borrowers can usually choose to either reduce their monthly mortgage repayments as a result of the reduced interest charge, or keep their monthly payments as they are in order to reduce the overall term of the mortgage by paying it off at a faster rate.
As you don’t earn interest on your savings, there is no tax to pay on them, and you can take your money out at any time. Offset mortgages can either have fixed or variable rates, depending on which kind of deal you want.
Buy to Let mortgages
Buy to Let mortgages are for people who want to buy a property and rent it out rather than live in it themselves.
The amount you can borrow is partly based on the amount of rent you expect to receive but lenders will take your income and personal circumstances into account too. They must also apply a ‘stress test’ so that they can see whether you’d be able to afford higher mortgage rates in future. First time buyers will find it more of a challenge to get a Buy to Let mortgage.
Our mortgage advisers know how complicated the mortgage market is and they’re happy to answer any questions you have. They’ll help you find the mortgage that suits you best. There’s no obligation.
