Bank Valuation and Mortgage Offer

Once your offer on a property is accepted, you can submit your mortgage application with the bank you have chosen to finance your purchase. You can use Appendix 3 of Part Three of the book “How to buy your first home in England (and Wales)” to compare the different mortgage products available to you and decide which one is best to go with.

The mortgage application would require the following information and supporting evidence – the buyers’ identity, the source of their deposit funds, details about their income, their solicitors’ contact information and the address of the property being purchased. If any third party is helping with the deposit, then they will also need identification and source of funds evidence for the third party as well. Once in receipt of all these documents, the bank will instruct a valuation of the property to confirm the loan amount would correspond to the property value. This valuation normally takes about 2 weeks and it costs between £300-£500 which is paid directly to the bank in advance. After receipt of the valuation, provided all other documents are in order, the bank will issue the mortgage offer and will send it to the buyer’s solicitor. This takes between 2-3 weeks after the valuation. 

How to find a mortgage

Regardless of whether you are working with a mortgage broker or directly with the bank, the process of finding a mortgage most often looks like this:

1. A short phone call, during which it is determined whether you are covering the essential requirements of the bank – how many people will buy together (in England it can be up to 4), whether everyone works, whether they work full time, whether they are employed or self-employed, how much deposit is available, where the deposit comes from. If someone gifts part of the deposit, more information about them will be needed. Details about the main aspects of your budget will be required – what your annual salary is, your basic expenses, any additional income, any consumer loans, hire purchases and credit score.

2. The second step will be to provide documents to support the above statements – payslips for your salary, letters for child benefits and other social payments you receive, savings accounts statements, current account statements and so on. Everything about your documents must be in order. All letters must be addressed to your current address, your identity documents must be valid, your names must be the same everywhere. If there are any discrepancies, it is good to eliminate them at this stage so there is no delay later.

3. Affordability search – in most cases, banks have online calculators that you can use to enter basic data about your circumstances and find out how much mortgage they would offer you based on your current budget. The questions are about your annual income, current loans and liabilities, the value of the property you would like to buy. This gives the approximate amount of the potential mortgage that the bank would offer you, and the amount is usually quite realistic as banks use the same system to determine how much credit applicants can afford.

4. The next step is to research more creditors, not just those who have issued a decision in principle. In England, this includes more than 300 banks, building societies and other financial institutions to which all licenced and independent brokers have access. They would look for the best offer according to your requirements and personal circumstances.

Good mortgage brokers would recommend at least two or three banks with the best offers, considering all factors – interest rate, repayment period, fixed interest period, fees, allowed overpayments and other personal preferences or requirements. In addition, the broker would give you a document called Mortgage Quote or Key Facts Illustration, which is a clear example of the monthly instalments, how many they will be depending on the repayment period you have chosen, how much you will return to the bank for the entire period of the loan, the interest rate, any product fee, the annual loan rate (APR), any fees and so on.

If you need a very good mortgage adviser, we recommend you contact Hristina Hristeva at Umbrella Mortgages for whom there are plenty of excellent online reviews on all social media, all from her current clients. Below are her contact details.

5. If all the numbers look good, the next step is the so-called agreement in principle. This is done by checking your credit history, following which the selected bank confirms that it would offer you a loan and issues a Decision in Principle (or Agreement in Principle), which some property agents require before agreeing to arrange any viewings.

This is when it is most reasonable to start looking for a property because you already have the bank’s consent to finance your purchase. Then, of course, you can look for properties before that, but you run the risk of liking a home before you have any confirmation that you have the funds to buy it. This could slow down the process of your purchase and, in some cases, may mean that you could not buy a home at this time. As soon as you choose a property and your offer is accepted, you can submit the mortgage application. By now, the broker will have all the documents and basic information about you, so the process of applying for a mortgage becomes effortless. The only additional information included is about the property (price and address), as well as the contacts of the solicitor you have instructed. Finally, everything is sent to the bank, following which it will instruct the valuation of the property.

6. Banks make the most basic property valuation and require you to pay for it at this stage. Once the bank has received the property valuation and is satisfied with all the documents presented to them, they will issue the official mortgage offer. This is the official legal document that the bank sends to the buyers, the mortgage broker and the buyer’s solicitor, along with instructions to the solicitor to represent the bank as a party to the purchase.

7. Once the valuation is received, provided the bank is happy with the rest of the documents, they will issue the mortgage offer and will send it to the buyer’s solicitor together with instructions for the solicitor to act for the bank.

The document pack the bank sends to the solicitors contain a mortgage deed which your solicitor will send you for signature. This is the official contract with the bank which binds you with obligations in relation to the mortgage.

7. Once all due diligence is complete and the contracts are exchanged, the buyer’s solicitor will request the mortgage funds from the bank to arrive on the day of completion or the day before. Bank normally require five day’s notice for withdrawal of funds.

As far as the mortgage advisers are concerned, they will remind you of ways to protect your home and will offer to tell you more about the various insurance policies you can benefit from such as life insurance, critical illness insurance, accident and private health insurance and so on.