The Application and House Buying Process

Step-by-step - our approach

For most people, buying a house can be a stressful experience; for young people trying to get a foot on the property ladder, there is the added fear of dealing with a potentially complex and expensive process for the very first time. With most of our customers belonging to the latter category, our aim is to try and make the process of applying for your mortgage as painless as possible. The essence of our approach is to take things step by step. For example, some mortgage providers might try to encourage you to take out life insurance at the earliest opportunity but while we will provide protection illustrations later in the process, we believe that there are more fundamental steps to negotiate before this.

Those key steps can be summarised within the context of the following basic application timeline (in practice some steps may take less more or more time depending on the specific circumstances).

The application timeline

1. Setting a price range and budget

Use our mortgage calculator and free mortgage illustration tool to obtain an estimate of how much you might be able to borrow and how much that might cost to pay back each month. That way, you can set yourself a property price range of the lowest and highest price you might realistically consider.

Time: it could take you many months to decide that you want to take the plunge and start looking for property, but you can quickly obtain an estimate of your borrowing potential by using the free mortgage illustration tool.

2. Property hunt

Finding a property takes time and patience. With so much information available in the media on what to do when looking for a home we will not endeavor to replicate it here. Needless to say, conduct thorough research and tap your friends or relatives for tips if they have experience of buying property. One important point to note with regard to the mortgage is that estate agents may offer you mortgage services: please remember that they ultimately represent the vendor and it may be detrimental to your negotiations if the person you are trying to bargain with is aware of your earnings and full 'borrowing potential'.

Time: this is one of the hardest stages to estimate because there is huge variation in the time it takes for our customers to find a property they want to buy. It would be reasonable to set aside four to twelve weeks, depending on how intensively you search, how lucky you are with the properties available and how easily you find a property that meets your requirements.

3. Making an offer on a property

Once you have found a property you wish to buy, you make a verbal offer either to the seller or to the estate agent, who may ask you to confirm this in writing. You can offer an amount less than the asking price - be prepared to bargain, but remember if your first offer is refused you can increase it. However, once an offer is accepted by the vendor it is difficult to reduce it (but remember that the offer is subject to valuation and any defects not known about when you made the offer that emerge when the property is surveyed would enable you to go back to the vendor and discuss the price again).

NB: Once accepted, this offer is not binding at this stage and is conditional on the results of a valuation and survey of the property - technically, the offer is "subject to valuation and survey, and subject to contract".

Time: it can sometimes take several days to conclude negotiations and if your offer is rejected or bettered by another buyer you may find yourselves going to back to the drawing board and starting again. Assuming a week for negotiations would be a reasonably conservative estimate.

4. Agreement in principle

An 'agreement in principle' is an agreement from a mortgage lender that in principle they will lend you a specified sum for property purchase, on the condition that the property is satisfactory as security for the mortgage and provided that you are able to verify your income and satisfy any other conditions. This is an important step on the way to buying a property because if you possess an agreement in principle for the amount you are hoping to spend it means that you can make a credible offer for a property in that price range, knowing that you have a mortgage in place. Indeed, when you make an offer on a property, the vendor or their estate agent will probably ask if you have an agreement in principle and may request proof (which we can provide, see below).

To apply for an agreement in principle, you simply go to the agreement in principle page, then answer some personal questions for each applicant: income, credit commitments, employment etc. We will respond with illustrations of mortgages that you could apply for and you can then choose one to request an agreement in principle credit check.

The result of the agreement in principle credit check is a key moment in the application process. If you pass, you can make a firm offer on a property or if you have already made an offer, provide evidence that your application is credible. To support this, we can provide you with a letter confirming he agreement in principle, if required. Also, if you are successful we will automatically convert your agreement in principle application stored on our server to a full mortgage application requiring you to answer further questions (e.g. property details) once you have found a property.

If you are rejected at agreement in principle stage, this will probably mean that you have failed credit checks as we will have tried to iron out any other issues with your application when you submit it to us (all applications come to us first and are fully assessed by a member of our team before being forwarded to a lender for an agreement in principle decision). If you fail, we will do our best to assist in resolving the situation.

Please note: in this timeline the agreement in principle application follows making an offer on a property. This does not have to be the case. Many customers like the confidence of knowing that they could definitely afford a specified amount on a mortgage before looking seriously at property, and will therefore tend to request a credit scored agreement in principle earlier in the process, and before they have found a specific property they wish to buy.

Time: if you apply for a non-specific agreement in principle it may take us 24 hours to respond with a detailed illustration, depending on workload. Once you make your mortgage choice and request a decision from a lender we can often obtain that decision within a few hours, though this will be longer with some lenders.

5. Appoint a Solicitor

It is standard practice that you have a solicitor in place when you come to apply in full for purchasing a specific property, but ideally you should appoint a solicitor on the understanding that you will not instruct them to proceed with any work for which non-refundable fees are incurred until the sale is genuinely underway (e.g. after receiving a positive valuation of the property from the lender). The solicitor is responsible for important aspects of the property purchase, known as 'conveyancing'. This process includes:

• Legal checks (e.g. 'investigation of title', which proves whether the vendor has the right to sell the property).
• Advising you, the purchasers, on issues arising in the purchase process.
• Dealing with the various financial and contractual issues, such as processing the mortgage transaction, paying stamp duty and executing the mortgage documentation.
• While you may appoint any firm of solicitors to represent you, we will also offer you the option of solicitors specialising in our key areas such as buying with friends. In particular, we offer the option of solicitors who are experts in the share to buy legal agreement and who will carry out both your conveyancing (standard house buying legal work) and assist you with preparing the agreement, all for a single competitive fee. Click here for our FAQ with further information on this arrangement with our partner solicitors.

Time: finding a solicitor can take time so it is worth researching this aspect of the process when you start looking at property. If you wish to use one of our partner firms, there is a box to indicate this on the application and we will provide you with their contact details so that you can obtain a quote.

6. Full mortgage application

Once your offer is accepted on a property that you wish to buy, you will need to submit a full mortgage application for that specific property. In order to apply in full:

• If you have already successfully obtained an agreement in principle from a lender when your offer is accepted by the vendor, and the purchase price is within the maximum amount they are willing to lend, you simply log back in to your agreement in principle application on our server and you will see that it has automatically been converted to a full application (we will provide you with log-in details to access the application). Therefore, all you have to do is answer the remaining questions for the full application (details of the property, your solicitor etc) and on completion this will be submitted to the lender as a full application. Please note: we will check that the product you originally wanted on the agreement in principle is still available, and that it remains a competitive option for you, when you come to apply in full.
• If you have not yet obtained an agreement in principle, you should do so when your offer is accepted. If you pass agreement in principle you can then continue to a full application as outlined in the previous bullet point.

The main benefit of submitting a full application promptly after having your offer accepted on a property is that this reserves the rate, which is important because all rates, particularly those that are competitively priced, can be withdrawn at short notice. On receipt of your application, the lender will check your income proof and obtain any mortgage fees from you and when these are paid (usually by cheque or card) a valuation of the property will be instructed. Instruction of the valuation is extremely important where you have made your offer and the seller is keen to see evidence that you are ‘serious’. This is because the vendor is likely to be more convinced that your application is genuine and credible where you have paid for a valuation, and therefore this reduces the risk of the property going back on the market.

Time: on receipt of your full application we will check it and get back to you if we have any queries. An important point to look out for is property type - typically, applications for properties above commercial premises, some ex-council properties and those of unusual construction can cause problems and whilst there are lenders who may still accept the application we would want to look into this further for you. Assuming that we are happy with everything, we will normally submit your full application to the lender instantaneously, depending on whether it is by electronic or paper-based means. You should allow up to 48 hours for a lender to start processing an electronically submitted application and up to five days for posted applications.

7. Valuation/Survey of the Property

A valuation is required by the lender to verify that the property is adequate security for the mortgage. There are three principal types of valuation:

• A standard valuation: just that, a basic assessment of the property. This will not be a detailed examination and is principally to satisfy the lender that the property is suitable security for a mortgage (i.e. that the property is worth what you are seeking to pay for it - the lender needs to know this in the event that they had to repossess the property and sell it to recoup the money they advanced you, hence, the need to establish that it is 'suitable security'). You may wish to consider this basic option if: you are buying a new property; you have a qualified friend or relative on hand to conduct a more detailed survey for you; or you are confident that there are no issues about the condition of the property that you would like to be investigated by a surveyor.
• A Home Buyer's Report: this is based on a more detailed inspection of the property and is designed to highlight key features of the property and indicate any faults. This is more expensive than a basic valuation but also provides you with much more detailed information about the property which you may be able to use to go back to the lender and renegotiate the price or terms. This option is recommended by the Royal Institute for Chartered Surveyors. It is important to stress that a Home Buyer's Report combines both a basic valuation and a more detailed inspection for your benefit and is generally arranged through the lender; it's just that the same person carries out both inspections simultaneously so as to make the overall cost of the detailed survey more economical, assuming that you would have to pay for the basic valuation anyway.
• A Full Structural Survey: a comprehensive report on the property. A relatively expensive option but providing the most in depth report on the property of the three options. This is to be recommended where the property is of considerable age or unusual design or construction. Although some lenders will arrange a full structural survey, in most cases, you would first have the standard valuation from the lender and if it passed you would instruct a local surveyor at your own discretion to conduct the full inspection of the property.

In deciding which option to choose, it is important to remember that a property purchase involves spending a very large sum of money. Where the option of a free valuation is not available, you may find that the difference in price between a basic valuation and a Home Buyer's Report is two or three hundred pounds - perhaps a price worth paying for the piece of mind of knowing that you are spending many thousands of pounds on a property with no serious defects that you might not otherwise have been aware of. Click here for an important FAQ: what happens if the valuer finds problems with the property?

Time: the valuation should be instructed within two or three days of the lender receiving your full application and the payment of any fees thereof, but this will be longer where the lender has a backlog. In total, you should allow up to seven days from the day you submit the full application electronically or ten days if submitted by post for the valuation to be carried out and up to two weeks before you know the result. It normally takes longer to receive a Home Buyer's Report as it can take the surveyor several days to produce this in-depth report on the property. You should also be aware that where lenders have had market leading rates and are very busy with applications, it can take quite a bit longer than this timescale to get a valuation instructed and this can lead to 'restless' estate agents and sellers pestering you for a valuation to take place. In these circumstances, we will do our best to expedite matters.

8. Verification of identity and income

It is worth remembering at this stage that any agreement in principle that you receive is subject to valuation of the property and verification of income and identity. When both the property and proofs have been assessed satisfactorily, you will receive a mortgage offer (see next step). The lenders need to verify two points:

• Your income: in order to be satisfied that you can afford to repay the mortgage. This will usually be verified by original or certified copies of P60s and payslips, or alternatively, an employer's reference where these cannot be obtained or an accountant's reference for self-employed applicants.
• Your identity: in order to satisfy EU Money Laundering Regulations. This will be verified by original or certified copies of documents confirming your identity (usually photo page of your passport or driving license); and original or certified copies of documents confirming your address (typically a bank statement or non-mobile phone utility bill from the last three months).

The way in which this documentation is obtained will vary from lender to lender. In some cases, you will be able to apply electronically without providing this paperwork and then once your application has been accepted, you will then be asked to forward certified or original copies of your verification paperwork to us or directly to the lender. If your application is paper based, you will usually have to provide the paperwork in full when you apply. We will provide more details nearer the time but in all cases we will direct you on what paperwork to send in and where to send it, and we will ensure that all proofs are checked before forwarding them to the lender.

Time: it usually takes the lender 3-5 working days from the time they commence processing your application to verify your proof of income. On occasion they may query payslips or other points and may request an employer's reference which can delay the process slightly. As always, this process can take considerably longer if there are delaying factors.

9. Offer of advance from the mortgage lender

The 'Offer' is the most important milestone of the mortgage application prior to actually exchanging contracts and then completing the purchase. When the lender has assessed both the property (or 'security') and your proof of income and identity, and is satisfied with all, they will proceed to issuing you with an Offer document that will also be copied to ourselves and to your solicitor. The Offer will set out the full terms under which the mortgage is to be advanced. Once the Offer is issued, we will provide you with a copy of the share to buy legal agreement (if required) and send you illustrations for insurance to protect your mortgage.

Time: from the moment the lender starts processing your full application, we will aim to have an Offer produced for your case within two weeks. In our experience, this is a reasonable time to expect the lender to verify your income and conduct the valuation. However, the Offer can be issued within five working days but it may take far longer than the two week target because of factors such as case backlog, delays in inspecting the property or difficulty in obtaining an employer's reference.

10. Final Stages of the Purchase

When you have received an Offer of advance from the mortgage company, the remaining stages of the purchase are predominantly in the hands of your solicitor. While your solicitor is your main contact at this stage, we will always be on hand to deal with any queries that arise as it is our aim to assist you right through the house buying process to the best of our ability. Post-Offer, the remaining stages are as follows:

• Draw up contracts: your solicitor will draw up a mortgage contract which all applicants will need to sign. You will normally be asked to place a deposit with your solicitor; this will usually be for 5% to 10% of the purchase price. If you are applying for a 100% mortgage you may have to exchange contracts and complete on the same day because of the absence of a deposit, or alternatively your bank may be able to lend you the deposit on sight of the mortgage offer.
• Exchange contracts: a date is then agreed on which contracts are exchanged. Exchange of contracts is an important milestone in purchasing a property. It is at this stage that you are legally committed to proceed with the purchase of the property. On exchange of contracts your solicitor will also recommend that you commence buildings insurance cover (we can arrange this). A date is also agreed for 'completion'. If you do not proceed after exchange you may lose your deposit.
• Completion: this is the day you take possession of the property and actually move in. It is usually 2 to 4 weeks after exchange of contracts.

Time: the time from Offer to completion can vary enormously. In our experience, it is this part of the process when applications can be delayed the longest, which is why we aim to obtain the Offer as quickly as possible. Ultimately, the time any case takes to complete depends on a whole host of factors but if you were to assume 6 weeks from receiving an Offer to moving in to the property that would be reasonable, suggesting an overall target of two months from commencing a full application to completing the purchase.