How to Get a Mortgage: A Step-by-Step Guide

Applying for a mortgage can feel overwhelming, especially if it’s your first time. However, understanding the process can make it far more manageable and help you feel confident about securing your dream home. This guide walks you through the essential steps to get you started.

1. Understand What a Mortgage Is

A mortgage is a loan specifically designed to help you purchase a property. You’ll repay this loan, plus interest, over a set term. Mortgages come in different types, so it’s worth understanding the options:

• Fixed-Rate Mortgages: The interest rate remains the same for an agreed period, giving you certainty over payments.

• Variable-Rate Mortgages: The interest rate may change depending on market conditions.

Choosing the right mortgage type depends on your financial circumstances and future plans. Seeking professional mortgage advice can help you assess which option is most suitable.

2. Check Your Credit Score

Lenders use your credit score to assess your reliability as a borrower. It’s a good idea to check your score early and address any issues before applying for a mortgage. Steps to improve your score include:

• Ensuring all debts are paid on time.

• Reducing credit utilisation (the amount of credit you’re using compared to your limit).

• Resolving errors or discrepancies on your credit report.

A strong credit score not only increases your chances of approval but can also help you secure better mortgage rates.

3. Save for a Deposit

Most lenders require you to provide a deposit, usually a percentage of the property’s price. The higher your deposit, the better mortgage rates you’re likely to secure. General guidelines include:

• Aim for at least 5-20% of the property’s value: A larger deposit reduces the amount you need to borrow and can improve your loan terms.

• Consider government schemes: Options such as a Lifetime ISA (LISA) can help first-time buyers save for a deposit with a 25% government bonus (subject to eligibility and specific conditions). Ensure you fully understand how these schemes work, including any restrictions on withdrawals.

• Prepare for additional costs: In addition to your deposit, you’ll need to save for other expenses like stamp duty, solicitor fees, and survey costs. These can add up quickly, so factor them into your overall budget.

• Seek professional advice: Speak with a qualified mortgage adviser who can guide you on deposit requirements and recommend strategies to optimise your savings plan. They can also advise on eligibility for schemes that may enhance your deposit contributions.

4. Determine Your Budget

Use mortgage calculators to estimate how much you can borrow based on your income, expenses, and deposit. When determining your budget, it’s important to factor in additional costs such as solicitor fees, surveyor costs, and home insurance. These costs can add up quickly and significantly impact your overall affordability. Additionally, assess your monthly affordability carefully to ensure you are comfortable with repayments, even if interest rates rise in the future. Being realistic about your financial capacity will help you avoid overcommitting and ensure you can manage your mortgage sustainably.

5. Research Mortgage Products

It’s important to compare mortgage products across different lenders to find the best fit. Look at:

• Interest Rates: Decide between fixed and variable rates based on your preferences for stability or flexibility.

• Early Repayment Charges: Understand any penalties for overpaying or repaying early.

• Product Fees: Some mortgages come with arrangement fees that may impact your overall costs.

A mortgage adviser can help you navigate these options and identify the most suitable product for your needs.

6. Get a Mortgage Agreement in Principle (AIP)

An AIP, or Agreement in Principle, is a statement from a lender indicating how much they might lend you based on your financial situation. It is important to note that an AIP is not a formal mortgage offer or guarantee, but it can be a valuable tool in the buying process. 

By providing an estimate of your borrowing potential, it demonstrates to sellers that you’re a serious and credible buyer. Additionally, having an AIP can help you understand your financial position more clearly, giving you greater confidence when making offers on properties. 

Always ensure that the lender providing your AIP is authorised and regulated by the Financial Conduct Authority (FCA).

7. Choose the Right Mortgage and Apply

Once you’ve found a property and selected a lender, submit your full application. This will involve providing documents such as:

• Proof of income (e.g., payslips or tax returns).

• Bank statements.

• Details of any outstanding loans or credit commitments.

Ensure you have all documentation ready to avoid delays in the mortgage application process. 

8. Wait for the Lender’s Decision

Your lender will assess your application and may arrange a property valuation to ensure the price matches the loan amount. The process may take several weeks, so patience is key. 

If approved, you’ll receive a formal mortgage offer, which outlines the terms of your loan.

9. Finalise the Purchase

With your mortgage offer in hand, you can proceed with completing the property purchase. Work closely with your solicitor to ensure everything is in order. These are the key steps your solicitor will work through:

• Arrange for the transfer of funds.

• Complete all necessary legal checks.

• Ensure contracts are exchanged and signed.

Once the purchase is complete, you’ll officially be a homeowner!

Final Thoughts

Getting a mortgage might seem complicated, but by following these steps, you can simplify the process and approach it with confidence. Professional advice can be invaluable at every stage, helping you navigate the complexities of the mortgage market and secure the best deal for your circumstances.

Important Notice: This guide is for informational purposes only and does not constitute financial advice. Always consult a qualified mortgage adviser for personalised advice. Ensure any broker or adviser you work with is authorised and regulated by the Financial Conduct Authority (FCA).