The first stage of mortgage advice involves gathering the required information to meet the FCA Know Your Customer (KYC) requirements and to also be able to provide the most accurate advice to each specific client.
This involves obtaining various documents from the client to confirm information such as identification of the individual and their address (such as passport and utility bill), the annual income of each applicant (through payslips or accounts), confirm the monthly spending of each applicant (through bank statements) and make sure the credit history of each client is acceptable (through a credit search) if applicable.
Finally, a fact find document requires completion which covers the questions that a mortgage broker may be asked about a client by a lender during the application process. At this stage all relevant advice fees, data protection legislation and compliance requirements will also be explained to the client and understanding confirmed.
SOURCING THE RIGHT PRODUCT
This stage involves the mortgage broker using the information gathered to research the marketplace and source the most suitable mortgage product for each individual client or clients. This could be based on criteria such as monthly repayment amount, interest rate, size of arrangement fee or other product specifics.
An agreement in principle (AIP) is then applied for with the chosen lender, which involves a short application form and a credit search, after which the lender will confirm if the client is deemed an acceptable risk to lend the requested amount to. If so, an AIP certificate is provided by the lender to pass onto third parties such as estate agents, and a full application can then be completed and submitted along with the relevant client specific documents. You should receive a letter of suitability at this stage detailing the recommendations and why they have been made by the Broker.
Once the full application and documents are received by the lender, the application is underwritten by a qualified individual, based on the criteria and requirements of the specific lender. Communication will often happen between underwriter and broker to clarify any confusion or provide additional supporting documents to help the application reach approval.
Once the lender is happy that the client is suitable for the requested product at the normal terms, the valuation on the chosen property is requested and booked with a surveyor. Various types of valuation are available depending on the depth of knowledge needed on the property to satisfy the lender. The more detail needed – the more expensive the valuation tends to be.
Once a satisfactory valuation is received by the lender and all requirements are met, a formal mortgage offer can be made and is issued to the client, the Broker and the client’s Solicitor.
THE FINAL STAGE – LEGAL REPRESENTATION
Your Solicitor now takes the case over and hopefully proceeds to exchange and / or completion. This involves legal searches and other checks made by the Solicitor to ensure that the property transaction is legally binding and secure. Finally, the funds are requested from the lender by the Solicitor so that the transaction can be completed.
You can instruct your own Solicitor, or some mortgage products offer free legal representation as part of their terms and conditions.
This application process can vary in timescale depending on many different parameters. Most property purchases tend to take between six and twelve weeks from start to finish, but can take longer if any unforeseen issues are encountered or difficulties occur within a purchase chain. The mortgage element of this process is much shorter, taking between ten and twenty days from fact find to offer.