mortgage application

It is never easy to tell a precise time that mortgage application takes.

Perhaps you know the reason. Yes, you are right if you think that big decisions take time. Just like you were not able to decide the property is only a day and took a bunch of days, even months, similarly mortgage will demand time. It does not mean that you have to wait for a very long time. No, but at least, adequacy of days needs to be allowed to the procedure to get things done in the right way.

To give you a basic idea, a maximum one month may take for the complete journey. However, sometimes things happen in just 18 to 20 days. It all depends on the individual case.

Time is always an essential factor when it comes to a mortgage. People are usually in a rush to get funds for their big purchase. The ‘once in a while’ decision should complete on time and for that mortgage is a vital support. However, one has to go through a complete process to obtain funds, and personal circumstances stand in the way.

There cannot be one answer

With all the anxiety on the mortgage, it is natural for any borrower to ask how long does a mortgage application take. There cannot be a single or decided answer to this question, as several factors affect this decision.

To talk very rationally, it takes 18 to 40 days to complete the mortgage process. But how many days will take in case of an individual cannot be confirmed in advance? Attention should be given to all those aspects that affect the duration of a mortgage process.

Personal circumstances always drive the overall situation

The personal financial conditions of the applicants are always decisive, and the lender places its decision somewhere around them. After all, at the end of the day, it is the borrower who needs to pay off the loan; obviously, his situations are more important to consider.

An applicant with stable finances, good credit score, and employment stability get funds smoothly in less time. On the other hand, the one with flaws in payment history, irregular employment record, etc. becomes the cause of delay in the mortgage process.

The final loan approval takes time and with due reasons

However, the final offer comes at a later stage only when you finally pick a property. The lender then needs to recheck everything to match the pre-approval according to the last property value and also your financial efficiency. This takes a detailed study of your finances, and this is the reason that things take time.

The following things are time-consuming

  • Income verification
  • The detailed study of income and outgoing
  • Debt-to-income ratio
  • Your presence on the electoral roll
  • Credit mix – Domination of one type of credit is not a good thing to have in your financial records
  • Getting details about your solicitor to make sure that the legal part is going well
  • The valuation officer that the lender sends takes time. Maybe the officer has some other visits, which may cause you to wait for a week.

The above steps are the vital elements of the procedure and the anchors to take things forward. Before you ask about how to apply for a mortgage, it is perhaps better to ask what factors take time, as in that case, you can focus on working on those elements that depend on you. At least, if they happen on time, a lot of time can be saved.

Property type also decides the length

Of course, for every type of property, the lenders have different rules and regulations. Yes, the general rules are the same, but few factors cannot stay unaffected. Such as – loan for home quickly gets approved, but if it exists in a building that is partly used for commercial use, then approval may take time. It is because properties with shared use are considered less promising for future benefits; the minimal number of buyers are interested in them.

Property survey takes time to complete

For borrowers on furloughed income, the lenders will take 80% of their annual income. The monthly salary of a person on a furlough should have £2,500.

We should not forget that a property survey is an essential and unavoidable subject. It usually takes 7 to 14 days in the complete survey process. Varied steps are included in this process, and they naturally take time.

After all the documentation, the lender asks the surveyor to organize a survey. The surveyor office will contact the estate agent and discuss the date and time of the visit. On the decided date, the surveyor visits the property and completes the process.

Mostly, the person who visits the house completes the scrutiny the same day and submits the report to the underwriter of the lender. But the underwriter looks for approval from the surveyor to ensure that the property is worth the amount a borrower wants to borrow.

Current scenario affects the condition – Covid-19 is the latest case

Sometimes situations on our part act fine, but the world out there goes through chaos, and then everything gets destroyed. We all know how monstrous, COVID-19 has acted with the human civilization in the last few months.

  • Covid-19 has affected the mortgage process in the following ways –
  • The income assessment is stricter now because many applicants are on the furloughed income. They have to give proof to the lenders that their company has plans to them. If they cannot do that, some complications may arise.
  • Mortgage companies are taking more number of documents and financial details to ensure that the applicant has the required repaying capacity. They are not happy with just a salary slip, the need reasons to find the possibility of a stable income in future.
  • The demand for deposit is bigger now due to lower LTV. However, lenders like Santander, Halifax, Virgin Money etc. are back with their higher LTV products. The issue is that people have a weaker repaying capacity nowadays, which naturally affects the loan to value offered by a lender. You can play safer on the property ladder with a 20% to 25% deposit. It causes delays because you need time to arrange this much amount.
  • The procedures are more dependent on digital processing now, which can cause more number of rejections. It is easier to explain your financial situations to a person on the scrutiny of finances but what explanation you can give to artificial intelligence. The (human) underwriters can understand your situation and give a little consideration as well as the flexibility to you. But in digital processing and verification, there is no second chance. But those with no issues can find it useful as things happen faster in that case.
  • One relief is on the part of stamp duty where you do not need to pay any charge on the property of up to £300,000. After that, according to the slabs, you have to pay a certain percentage for stamp duty. The next slap is of 5% SD, and it increases according to the increase in the property price. The new rule is a massive relief for the first time borrowers. At this time, when the deposit amount is immense, and it is challenging to take higher LTV, lower stamp duty can help in making significant savings. That can be added to the deposit money.

 So many things have changed, few things are different for good, and few have become more challenging. Obviously, with this changed scenario, it has become difficult to expect a fast speed of the mortgage application. However, many borrowers keep patience as they know that things are difficult nowadays. If you are among them, it is good because in that case you are going with the flow and currently it is the safe play strategy.

Factors that cause a delay while the lenders process your mortgage application

Many things demand equal attention at the time of the mortgage procedure, and that causes a delay in the completion of the process.

  • The verification of income goes through varied conditions. The current income status, commission, etc. as additional income, salary slips, etc. all are required.
  • Bank statement to get to know the income-outgoing ratio of the applicant is necessary. It takes deep scrutiny of the facts and figures.
  • Credit mix and debt management also come under consideration, which takes a lot of time. In case of late or missed payments, the mortgage process gets slow. Until the lender has no clarity behind the reasons of these flaws, it does not take the things forward.
  • Verification of current address demands a specific time. The mortgage company needs to contact the electoral commission to take the details of the presence of the borrower in the documents.

The above factors are a vital part of the process, and they take their decided time. You cannot make the mortgage companies compromise on that part because this is something that even they cannot control.

How to improve the tempo of the mortgage application?

Although the final decision is in the hands of the lender only but preparations before the actual process can help. Here are the small but significant ways to give a push to your application speed.

  • Keep all the documents ready
  • Take the help of an online mortgage broker to handle things professionally
  • Stay in touch with your solicitor to make sure that the buying process is moving in the right direction of the law
  • Keep (not very frequent) calling all the related parties like agent, broker, solicitor and ask them to try to do things faster

Some tips to speed up the mortgage process

Not everything is in your hands, but there are certain factors that you can control to make the situation better. At least try to work on some tips that may increase the speed of the mortgage process. In that way, you can borrow money faster and can accomplish the big goal of property purchase.

  • A strong proof of regular income and continuity of job – CERTAINLY IMPORTANT

You know how uncertain are the situations in the market. Lenders are at considerable risk; they are extremely insecure and have put many gatekeepers in front of the borrowers on the part of repaying capacity. Concern for the employment situation of the borrower is one of the prime concerns. The stronger you show yourself on that part, the faster is the mortgage process.

  • A BIG deposit – ALWAYS A THUMB RULE

Of course, there is no requirement to explain the role of a big deposit in the speed of mortgage procedure. When you offer a considerable amount as the down payment, the gap between the LTV and the property value reduces. It makes the attainment of funds more straightforward and faster. You need to struggle less on the part of affordability because already a big part is covered by the deposit money.

  • Hire a mortgage broker

With a detailed knowledge of the mortgage market, a broker can always help you understand the situations in a better way. Look at the current scenario; people are already in tremendous stress.

They are anxious and restless after the considerable drop in financial strength due to the corona pandemic. Most of the mortgage seekers are chasing the brokers to guide them about what to do in a tough time. Even the lenders depend on the broking companies for the initial income assessment of the applicants.

The above points are the prime pillars that can help increase the speed of the mortgage process. In turn, you can get better chances of approval.

  • Keep control of expenses

What you spend always comes in the notice of the lenders, and it is better if you can manage to spend wisely. Every penny is precious, and it should be used for some real purpose. Weekend parties, eating out, going for a trip (very frequently) etc. can be fine. However, if the lender feels that you do that irrespective of your financial issues, it can cause a problem at the time of the mortgage application process.

Conclusion

The application process for every mortgage applicant brings different experiences. The actual need is to understand and accept the fact that unnecessary hurry only spoils the rhythm of the loan process. Take professional assistance and make sure that the application is moving in the right direction. After all, patience is the first and foremost need for a big purchase.

Technically, there is no point to feel anxious about the time that consumes in the process of the mortgage application. You cannot control the procedure because everything needs to go through formalities, and they cannot be compromised in importance. It is not possible to artificially speed-up the things, because in that case, you will be doing your loss. In fact, haste is a clear invitation to rejection.