Help if you’re DIP-ping your toe into mortgage market
Hello and welcome to the December column, where we talk all things mortgages.
We have provided mortgage advice to hundreds of clients looking to buy a new home – most of whom came to us and had no idea where to start.
Budgeting and preparing for Christmas is likely taking priority for most people right now.
However, if you’re thinking of buying a new home in the New Year, you’ll want to be in the best possible position to start looking for somewhere.
That’s where using a mortgage adviser can be invaluable.
Getting a decision in principle
The first thing you should do before beginning your property search is to get a decision in principle (DIP).
That way, you know what your parameters are when looking to buy a new home, such as your maximum purchase price, mortgage amount and how much deposit you’ll need.
To secure a decision in principle, you will have an initial appointment with a mortgage adviser, which can be done over the phone or face-toface.
The adviser will gather basic information such as your employment status, income, and any credit commitments, such as credit card or loan repayments.
They will then calculate the likely borrowing amount available and submit an initial application to the relevant lender(s).
An approved DIP will give you an approximate purchase price when searching for properties, and an indication of what your minimum deposit should be.
By providing evidence of your DIP to estate agents during viewings, you can demonstrate your commitment to the homebuying process and ability to afford the property. Having a
DIP in place means that estate agents may look more favourably at any offer that you submit for a property.
Supporting documentation and next steps
If you have an offer accepted on a property (which is arranged through your chosen solicitor), you would supply your supporting documents for your mortgage application to your adviser to submit.
This usually consists of payslips, bank statements and an identification check.
This information is used by lenders to complete their own checks (also known as underwriting), and as evidence that you can afford the mortgage.
The lender will deal with your broker directly if they have any questions about your application.
If they are satisfied with the information supplied and it passes the final credit check, a mortgage offer will be issued.
This formal offer essentially guarantees the amount you can borrow on your mortgage.
If there are no significant changes to your circumstances before you complete, your solicitor will complete the legal work required and you should expect to get the keys to your new home within six to eight weeks.
While some circumstances may extend this timeline, your adviser will work with you to resolve any issues that may arise during this period.
Your mortgage funds will then be released on the completion date.
These are sent by your solicitor to the seller’s solicitor, along with your deposit.
Once this is finalised, you can then collect your keys and move into your new home.
That’s a brief overview of how the homebuying process works.
I hope it provides you with some insight into what’s involved, especially if you’re looking to buy a new property
in the coming months.
The countdown to Christmas is well and truly underway, so I just want to send my best wishes to everyone for when the time comes. Thank you for
your continued support of our local business, and I will be back in January with some useful information around mortgages and the property sector.