How to get a mortgage: the steps from application to offer

How to get a mortgage: the short answer

To get a mortgage, you work out what you could borrow, get a mortgage in principle, then make a full application with evidence of income, spending and deposit. The lender searches your credit file, assesses whether you can meet the payments and values the home. If satisfied, it issues a written mortgage offer, and the money is released on completion.

The rest of this guide takes each step in turn, then covers what changes on a new build.

Before you apply: budget, deposit and credit file

Work out what you could borrow

Lenders look at two things: your income, and what is left of it after your spending and debts. The how much you could borrow calculator gives an illustration from your own figures, and the guide to mortgage affordability explains the rules lenders follow.

Know your deposit and your loan-to-value

Your deposit sets your loan-to-value (LTV): the mortgage as a share of the price. A bigger deposit means a lower LTV, which typically widens the choice of mortgages. The guide to loan-to-value explains the bands, and the cash you need calculator adds the costs beyond the deposit.

Your credit file

GOV.UK's home buying guide, last updated in 2019, says the amount you can borrow is influenced by your credit score. The Information Commissioner's Office says the three main consumer credit reference agencies in the UK are Equifax, Experian and TransUnion, and that you do not need to pay a fee to get a statutory credit report from them. If an address or an entry on the file is wrong, the ICO says you can raise it with the agency that supplied the file.

Step 1: get a mortgage in principle

A mortgage in principle, also called an agreement in principle or a decision in principle, is a lender's estimate of what it might lend, based on basic details and usually a credit check. The lender sets how long it lasts, commonly one to three months. It is not a guarantee, and it does not commit you to that lender. The guide to the mortgage in principle covers how to get one and what it does to your credit file.

Step 2: choose how to apply

Part of knowing how to get a mortgage is deciding whether to take advice or choose one yourself.

• With advice. A mortgage adviser asks about your needs and circumstances and recommends a mortgage. FCA rules require a firm that gives advice to take reasonable steps to make sure the mortgage is suitable for you. Some advisers work for one lender and can only advise on that lender's range; others, often called brokers, look across many lenders. The guide to using a mortgage broker explains the difference and how advisers are paid.
• Without advice. This is called an execution-only sale. You identify the mortgage yourself, and FCA rules require the firm to tell you that it is not required to assess whether that mortgage is suitable and that you will not have the protection of the rules on assessing suitability.

To see what is on the market before you speak to anyone, the mortgage rates comparison lists lenders' published rates for your price, deposit and term, and the guide to the types of mortgage explains fixed, tracker and variable rates.

Step 3: the documents lenders ask for

Under FCA rules a lender must obtain evidence of the income you declare, from a source independent of you, and must not accept self-certification. Payslips, bank statements and tax returns all count as independent evidence, even though you are the one who supplies them.

MoneyHelper and GOV.UK list what lenders commonly ask for:

Lenders differ on the detail, including how many months of payslips and statements they want and what evidence of your deposit they need, so the lender's or adviser's own list is the one to work from. MoneyHelper notes that the figures on the application form need to match the documents. If you work for yourself, the guide to the self-employed mortgage covers what counts as evidence.

Step 4: the full application and the checks

Once a seller or builder has accepted your offer, you make the full application. GOV.UK notes that if you have a broker, the broker may complete it for you.

The lender then does three things:

1. A hard credit search. Unlike a soft search, this is recorded on your credit file. Experian describes its effect on your score as small and temporary.
2. An affordability assessment. FCA rules require the lender to take full account of your income after tax and National Insurance, your committed spending such as loans and credit cards, and your household's basic living costs. It must also take account of the effect of likely future interest rate rises on your payments.
3. A valuation of the home. See the next step.

MoneyHelper says most mortgage applications take between two and six weeks to be approved, and that having the documents ready helps to avoid delays. That is a typical range, not a limit; no rule sets a time.

Credit score for a mortgage

There is no single score that gets you a mortgage. Experian says there is not a specific credit score you need, because each lender sets its own criteria and builds its own score from your credit history, your application and its own lending policy. In Experian's words, there is not just one credit score, so a number from one agency is not the number a lender uses. The guide to the credit score for a mortgage covers what is on the file and how long each entry stays there.

Experian's guidance on preparing for a mortgage application covers:

• Making credit payments on time.
• Avoiding applications for credit in the six months before a mortgage application.
• Being registered to vote, which helps companies confirm who you are and where you live.
• Keeping balances low against your credit limits.
• Checking that your credit report is accurate and up to date.

Step 5: the valuation

The lender arranges a mortgage valuation of the home it is lending against. GOV.UK is clear that this is not a survey, and that it does not protect you if something goes wrong with the property.

If the valuer puts the home's value below the price you agreed, lenders generally base the loan on the lower figure. That leaves a gap to fund, a price to renegotiate, or a different home or lender to find. The guide to new-build mortgages works through an example.

Step 6: the mortgage offer and how long it lasts

When the checks are complete, the lender issues a mortgage offer. FCA rules require a lender that offers to enter into a mortgage to give you a binding offer in an offer document. The document must state prominently how long the offer is valid, and must explain how to complain. The details to compare with what you expected are the loan, the rate, the fees, the conditions and the expiry date.

Two time limits matter:

• The reflection period. FCA rules require a lender that makes a binding offer to give you at least seven days to consider it. During that time the offer stays binding on the lender, and you can accept it at any point.
• The expiry date. The FCA says an offer will normally stand for between 3 and 6 months, depending on the lender. No rule fixes the period, so the date on your own offer is the one that counts.

Some lenders will extend an offer if asked before it expires, but that is the lender's decision. If the offer lapses, you may have to apply again, at whatever rates are available then.

After the offer, your solicitor handles exchange of contracts and completion, when the lender releases the money. The mortgage fees guide lists the costs that fall due along the way.

How the steps change on a new build

How to get a mortgage on a new build follows the same steps, but the dates are different.

A short window after reservation

Under the New Homes Quality Code, the date a reservation agreement sets for exchange of contracts must be at least six weeks after you reserve, unless you ask for an earlier one. The application, the valuation and the legal work all have to fit before the builder's exchange deadline. GOV.UK advises making sure your lender and legal representative know the deadline and can meet it. Buyers often gather their documents before they reserve; reservation to completion sets out the timetable.

An offer that has to outlast the build

If you buy off plan, you may exchange contracts months before the home is finished. An offer that stands for 3 to 6 months can run out before completion. GOV.UK warns that a mortgage offer may need to be refreshed on a new build because offers usually last only for a limited period.

Some lenders give longer offers on new builds or will extend one, and some will not. How long the offer lasts, and what the lender does if the build runs late, are questions to settle before exchange, because after exchange you are committed to buy. The guide to buying off-plan covers long-stop dates and delays.

Incentives and new-build criteria

Lenders set their own rules on builders' incentives and on new-build homes, and some want a bigger deposit on a new-build flat than on a house. The guide to new-build mortgages explains how incentives are disclosed to the lender. Published rates for new builds are on the new-build mortgage rates page.

The guide to the mortgage in principle sets out what the Code says about your freedom to choose your own adviser.

If your mortgage application is declined

A refusal from one lender is not a refusal from all of them, because each lender sets its own criteria. If you are working out how to get a mortgage after being turned down, these are the things to know.

1. What the lender must tell you. FCA rules require a lender that rejects an application to tell you without delay. If the decision rests on a search of a database, such as a credit reference agency's records, it must tell you the result and which database it used.
2. Your credit report. The ICO says you can get a statutory report from a credit reference agency without paying a fee, and raise any inaccuracy with the agency.
3. The cost of applying again at once. GOV.UK's guide warns that too many hard enquiries could lower your credit score, and Experian's guidance is to avoid credit applications in the six months before a mortgage application.
4. The likely cause. Refusals commonly turn on the credit file, existing debts, income against the payments, the deposit or the property itself.
5. Where advice comes in. A qualified, regulated mortgage adviser can see which lenders' criteria fit your circumstances before another application is made.

If you think a lender or adviser has treated you unfairly, the complaint goes to the firm first. FCA rules require the offer document to explain how to complain and whether the complaint can then be referred to the Financial Ombudsman Service.

First-time buyers asking how to get a mortgage will find the schemes and deposits specific to them in the guide to first-time buyer mortgages.