Residential mortgage loans
Whether you're making that first step onto the property ladder or trading up to a larger home, obtaining a residential mortgage can be a daunting experience. There is always the worry that you might not be able to borrow the amount that you need on a residential mortgage to buy the home of your dreams, or worse that the residential mortgage lender declines to offer you a mortgage outright. Even when residential mortgage loans are secured, there are still things that can go wrong in the process that may prove to be more stressful than worrying about the mortgage application itself.
If you're getting stressed out about the prospect of finding a residential mortgage it helps to understand how the residential mortgage loans application process works in the first place. Having a better knowledge of what happens and why takes out the element of surprise, removing some of the worries associated with applying for residential mortgage loans. It also makes the whole process much more transparent, allowing you to decipher if and when you need to take action to chase up your residential mortgage application.
Residential mortgage loans applications - the process
All mortgage loans begin with the completion of a form. This first form may or may not be the formal mortgage loans application form, some lenders preferring to gather the relevant information about an applicant on a simpler form to begin with. This is done to streamline the process so the lender can quickly and easily identify mortgage loans applicants who fit their lending criteria and applicants who do not.
It is worth noting that the lending criteria used by lenders for residential mortgage loans vary a tremendous amount. For instance, some will put a heavier emphasis on the equity in your home rather than on your current income to debt ratio when initially considering the mortgage application. Other lenders however may place the emphasis the opposite way around.
For those mortgage loans applications that do meet the lender's initial criteria the mortgage will be approved in principle, allowing you to choose a specific mortgage product from the lender. You will then either be asked to complete a more detailed residential home loans application form for full mortgage approval or you'll be asked to provide evidence in support of your initial application. The lender will also check out your credit file to see if you are a good loans risk or not.
If after these additional checks you're still looking good for a residential mortgage, the mortgage lender will formally offer you one of their residential home loans complete with rates and terms. Only once you accept the residential mortgage by signing, dating and returning a copy to the mortgage lender does the residential mortgage become live.
At this point, the mortgage lender will contact your solicitor / conveyancer to confirm the success of your mortgage loans application and to let them know that the money will be available for you to make your home purchase at time of completion.