It can be tricky to know when to apply for a mortgage

When in the market for a loan, it’s tricky to know what to do first. Find a home and then apply for a mortgage or apply for a mortgage and then find a home. Each has its pitfalls, and Murphy’s Law being what it is, if you don’t have a mortgage in place when your dream home comes along you can bet someone else will - and they buy it!

On the other hand, apply now for a mortgage without a home and what happens if 6 weeks after your mortgage offer, you still have nowhere to offer on?

How mortgage lenders can help

Mortgage lenders understand this and so, in an effort to smooth the process, nowadays lenders are prepared to take applications for home loans even if you’ve yet to find the right place. This is called applying for a home loan ‘in principle’. The lender asks all the questions of you that are necessary to establish whether you are someone they want to lend to and, if so, how much and on what terms they are prepared to offer you a loan. You will be asked about your work, salary, hours worked, time as an employee, any bonuses, monthly expenditure, savings, etc. It’s also probably that they will check your credit history either at this time or before the offer becomes unconditional.

Some mortgage lenders are less keen to lend money on older housing stock or leaseholds or multi-floor properties. It’s therefore important that where possible you have some idea of what you are looking for before you make your application.

When does subject to status comes into play?

Once the lender has evaluated all the information you provide, they may make a mortgage offer which is, at this stage, subject to status. This means that whilst the offer is there in principle, the lender will need to see confirmation of the information you have provided (such as bank statements, P60s, etc) and also a valuation of the property that supports the criteria upon which they are prepared to lend. The primary criteria here is usually LTV or Loan to Value.

Most mortgage offers made subject to status are open for up to 6 months, allowing most potential buyers time to explore the market and find a place that suits them.

To speak to a mortgage adviser contact Mortgage Required on 01628 507477.

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