Mortgages.scot

There are generally 3 ways to apply for a mortgage, which one a borrower chooses is usually dependent on how confident they are understanding what they want, or whether they have any potential issues, bad credit for example.

Ways to apply for a mortgage

The following options are available when applying for a mortgage.

1. Apply directly to a lender online.
2. Visit a lender in person, such as a bank branch.
3. Use a broker to handle everything.

These days option 1 is becoming more popular. Lenders have made it very easy to apply online, upload the documents they require and return a decision quite speedily. The downside is that they tend to be less responsive when it goes wrong as this approach is highly automated.

Visiting a lender can be a better option for some and when it comes to getting the most suitable product at the best rate in the market a broker is often the better option. Not every product on the market is easily found on the internet, a good broker knows where they are, it's what they do.

Whichever way a borrower goes there will be a lot of information required. Most of it is provided by completing online forms or questions asked by a broker. Evidence will be required and will include:

• Income, evidenced by pay slips, compensation statements, accounts and/or tax returns.
• Evidence of commitments which can include, car loans, credit cards, maintenance payments, other mortgages and so on.
• Evidence of assets such as the deposit for the property purchase and associated costs.
• Other evidence may be required on a per-lender basis.

Affordability test

In 2014 a new mortgage affordability test was introduced, it became a much tougher process than before and depending on how complex an applicant's income and expenditure is will determine how much information needs to be provided. It should be largely the same between lenders but of course, they all have their ways.

The affordability test is a bigger subject than I will cover here, I do have a guide that explains the affordability test in more detail here.

Agreement or Agreement in Principle (AIP)

If a property has been found and once an agreement has been reached with the lender the process then moves on to the valuation stage which I will cover next.

For those borrowers who have not yet found a property or simply want to know whether a lender will support them, it's possible to obtain a quick decision. This is known as an Agreement in Principle (AIP) or a Decision in Principle (DIP). Essentially the lender asks you all the questions it needs to know to make that decision but no evidence is provided by the borrower to support/prove that information.

Of course, the lender will caveat any AIP/DIP with the requirement to evidence all of the borrower's information and if anything is found to be incorrect they will withdraw the AIP/DIP.