How to get a mortgage: Here's what you need when applying

Buying a new property, getting a mortgage and remortgaging are all huge financial decisions. They involve a number of different steps and a host of parties, including solicitors, estate agents and mortgage brokers.

What's more, some of the steps are different depending on whether you're taking out a mortgage to purchase a property, or remortgaging and negotiating a new deal.

This guide helps to demystify the process. From getting a mortgage in principle before searching for a property, to the documents you need when applying for a mortgage or remortgaging, we explain what you need to do.

We also consider how to get a mortgage in various circumstances, including when you're a first-time buyer, are self-employed or are looking for a buy-to-let mortgage.

It's always a good idea to compare mortgage rates to find out what deals may be available.

If you are buying a home, the first step towards getting a mortgage usually involves applying for a mortgage in principle.

This is also known as an agreement in principle or decision in principle, and it indicates how much a mortgage provider might be willing to lend you, based on information that you provide.

You don't need to know the property you'd like to buy to get a mortgage in principle. In fact, doing this before ramping up your property search helps you narrow your focus on homes that you can afford to buy. It also shows you're serious about buying.

But this won't be locked-in – even if the lender agrees to a mortgage in principle, there's no guarantee it'll actually offer you a mortgage when the time comes.

You can apply for a mortgage in principle directly with many lenders online or in branch. Alternatively you can speak to a mortgage broker or adviser who should be able apply for a mortgage in principle for you.

To get one you'll need to give the lender or mortgage broker your details including information about your income and outgoings. It should only involve a soft search of your credit file, which doesn't affect your credit score.

This is Money's partner L&C can give you a free mortgage in principle. Enter your details and find out how much you could borrow in a matter of minutes.

What if your mortgage in principle is declined?

The lender might refuse your mortgage in principle for a few reasons, including if it thinks:

• you won't be able to afford the mortgage repayments
• you don't have a large enough deposit
• you have a poor or limited credit history

Lenders look at your credit history to work out the risk of you not being able to repay the money. If you've struggled to meet your credit obligations in the past or are in significant debt, you'll probably find it difficult to get a mortgage in principle, and therefore a mortgage, from a mainstream lender.

In this situation it's best to request a free credit report from the credit reference agency (or agencies) the lender used to check your credit file – the lender must tell you which it used when you ask. You can scour your report for areas to improve, for example registering on the electoral roll.

You should also double-check the lender's criteria to make sure you meet them. If there's an element you fall short on, another lender may be more suited to your needs.

When you've found your ideal home and had an offer accepted, it's time to apply for a mortgage properly. If you're applying for a mortgage from the same lender that gave you a mortgage in principle, you should be able to retrieve the application and continue from there.

There's no obligation to use the same lender that gave you a mortgage in principle. But if you do go with a different mortgage provider, it may ask you to complete a new mortgage in principle before you apply.

What documents do I need for a mortgage?

Knowing what documents the lender will ask for can speed up the mortgage application process. You should be prepared to show:

• photo ID such as your passport or full UK driving licence
• proof of residency or nationality if you've moved to the UK from a different country
• the last three to six months' worth of bank statements (the lender may want to check your regular outgoings)
• proof of income (such as payslips or your tax year overview if you're self-employed)
• evidence of your deposit (bank statements, or if your deposit's a gift you may need to fill in a form to prove you're not expected to pay it back)
• P60 tax statement

Do you need a mortgage broker to apply for a mortgage?

You don't need to use a mortgage broker when applying, but they can find the best mortgage deals for your situation and speed up the application process.

While some brokers don't charge fees, others do. Make sure you understand fees before proceeding and compare a few different advisers before going ahead.

If you have more specific needs, for example you're self-employed or have been turned down for credit in the past, a broker can help you find the best deal for your situation.

The terms mortgage broker and mortgage adviser are often used interchangeably. They generally refer to the same type of service – someone who advises you on your options, including how much you can borrow, and searches the market for deals relevant to your situation.

But make sure you know which type of adviser you're dealing with. Some advisers will only look for mortgages from a specific lender or group of lenders, or have a more restricted range of products they can recommend. These are often employed by the lender itself.

Other advisers can search for the best deals from a wider range of providers. This is the type of adviser that's probably best to engage – look for brokers that describe themselves as independent or whole of market.

What type of mortgage can you apply for?

You can go for a fixed-rate mortgage, which fixes your interest for a set time, often two or five years. A variable mortgage on the other hand means that your interest can move up and down.

Also consider fees and your options for the term – a longer term means your monthly payments will be lower, but you'll pay more interest overall.

You can compare rates, fees and different mortgage terms using This is Money's true cost mortgage calculator.

How long does it take to get a mortgage?

It typically takes between two and six weeks for a lender to process your application and offer you a mortgage.

But there are lots of factors that affect how long it takes to get a mortgage, including:

• Your preparedness: do you have all your documents together, such as your passport, bank statements and utility bills?
• Whether you're using a mortgage broker: mortgage brokers and advisers can make the application process quicker - but check whether they charge fees.
• The lender's checks: the lender needs to check your credit history in full, your affordability and whether the property is worth the amount you're buying it for.
• Whether the lender needs more information: the lender may ask for more documents or details before deciding on your application.
• The type of property involved: Some properties, such as leasehold flats, may require a longer mortgage process as the ownership structure is more complex

Each mortgage application is different, which accounts for the wide variation in the time you can expect yours to take.

How long does a mortgage offer last?

A mortgage offer usually lasts for between three and six months. It depends on the lender so make sure you check. Once you've got an offer you can move on to the next stage of the process, which involves your solicitor carrying out legal checks on the property.

Many people choose to fix their mortgage rate for a number of years, commonly two or five. When this comes to an end, they will need to switch to a new deal otherwise they'll fall onto the mortgage provider's more expensive standard variable rate.

You can find a new deal with your existing lender, but you may be able to find a better one elsewhere so it's important to compare all your options.

Switching to a new deal with your existing lender is called a product transfer, while going with a new provider means remortgaging fully.

This involves many of the same steps as taking out a mortgage initially, including affordability checks and property valuation.

> How to remortgage your home: Your guide to finding the best deal

Here's an overview of getting a mortgage in different circumstances. A great way to find your best deal is by comparing mortgages.

How to get a mortgage as a first-time buyer

First time buyers can find it difficult to save for a deposit and their options are often restricted by what lenders are willing to let them borrow.

First time buyers should look at these options when getting a mortgage:

Lifetime Isa: this helps you save for a deposit quicker. You can put up to £4,000 a year into the account and the Government tops your contributions up by 25 per cent.

Keep in mind you can only use the money to buy your first home or for retirement – you'll pay a penalty when withdrawing for other reasons. You will also pay a penalty if you use it to buy a home that costs more than £450,000.

You can only open an account if you're under 40 and you must hold it for at least 12 months before you can use the funds to buy a home.

Low-deposit mortgages: typically first time buyers need a deposit of at least 10 per cent but some providers now offer 5 per cent deposit mortgages. Products like this usually have higher interest rates and there's risk involved with borrowing a larger amount – for example, the value of your property could drop below the value of your mortgage. This puts you in negative equity, meaning your property would be worth less than what you owe.

> What you need to know about getting a mortgage as a first time buyer

Your options are more complicated when you're moving home. You can sometimes choose to 'port' your existing mortgage to a new property.

This allows you to keep your current deal, but not all mortgages can be transferred like this.

Your available options will depend on whether your new home is cheaper or more expensive than your current one. For example, lenders can be reluctant to port a mortgage if you need to borrow more when upsizing.

Otherwise, you can settle your existing mortgage and take out a new one. This can be beneficial if there are more competitive mortgage deals available, but you should take early repayment charges into account.

These are likely to be due when exiting your current mortgage before the end of the term.

> Can you afford a bigger home? What upsizers need to know

How to get a mortgage when self-employed

The self-employed need to give mortgage providers more proof of their income than employed workers, who usually just need to provide their last three payslips.

In addition to documents such as your photo ID, utility bills, evidence of deposit and bank statements, the self-employed should be prepared to give:

• certified accounts of two or more years from a qualified accountant
• form SA302 from your tax return
• documents that support the information about your income in form SA302

These requirements can make it more difficult for the self-employed to get a mortgage, especially those who are newly self-employed.

But the mortgage application process is the same whether you're employed or self-employed. There aren't specific self-employed residential mortgages for those who run their own business.

A mortgage adviser can talk to you in more detail about getting a mortgage as a self-employed person.

How to get a buy-to-let mortgage

Buy-to-let mortgages are different products to residential mortgages and so have different requirements and application processes.

They're usually interest-only, so throughout the length of the mortgage you only make interest payments before repaying the loan in full at the end of the term.

To get a buy-to-let mortgage you'll often need to:

• have a deposit of at least 25 per cent of the property value
• show how much rental income the property can receive (usually lenders want to see it can earn at least 125 per cent of what you pay on your mortgage each year)
• own a property already
• give evidence of earnings outside of rental income
• be under the maximum age requirement (for many lenders this is 75)

If you're interested in a buy-to-let mortgage, the rules can be complicated, so it helps to have an adviser explain everything for you.

> How to invest in buy-to-let property – and other buy-to-let tips