Mortgage application timescales

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How long does it take to arrange a mortgage?

So you have found your ideal property and are excited about the prospect of living there – you can see yourself working in the garden or perhaps sitting in the conservatory.

Now the worries start – Will we get a mortgage? Will the valuation be OK?

You put in your mortgage application and now you really are panicking.

‘It’s been three days, why haven’t I heard anything? Will that bank statement be OK? What about that zero rate finance I just took – will that be a problem?’

‘Now it’s been a week – what is going on? There must be something wrong. They going to come back to me and say no – I just know it, this always happens to me.’

You are not alone, this is the experience of the vast majority of borrowers in the UK. Arranging mortgages is not a simple process and it takes some time. However, the majority of cases, when handled correctly, go relatively smoothly – it’s just that it does not seem that way to you.

Top tips to speed up your mortgage application

  • Use an experienced mortgage broker
  • Don’t ‘second-guess’ what you think the lender or broker wants to hear – be truthful
  • Provide everything requested swiftly and comprehensively in the format requested
  • Make sure copies of documents are clear – (do not photograph documents with your iPhone)
  • Do not contact the lender direct for an update – always go through your broker
  • Keep on top of any third party who is providing a reference for you (e.g. Employer, Accountant)

Here are some things that you should know that will help you understand the process and perhaps encourage you to go with the flow and relax.

Why does a mortgage application take so long?

When thinking about the time it takes to process a mortgage application you need to consider that every aspect of both your financial situation, your affordability, future affordability, and of course the security property, will be considered. The bank or building society will be agreeing to lend you a considerable sum of money for an extended period of time – they need to get it right, not only to protect their members or shareholders, but also to protect you the borrower from mistakes.

The mortgage regulator is watching everybody and is tasked by Government to ensure that shortcuts are not taken in the assessment process.

How big are the queues?

A small building society may be dealing with dozens of applications a week with just a handful of staff.

A major lender will be receiving thousands of applications every day and have hundreds of staff employed to process them.

If the lender has a particularly attractive rate, and finds itself with the lowest on the market, they may be deluged with applications. Suddenly finding yourself with two, three, four, or even five times your usual number applications can put strain on any system.

How are these problems dealt with by mortgage lenders?

Mortgage lenders will look to run an agreed process when handling mortgage applications. From the point of view of both risk and efficiency it makes sense to do things in the same order, asking the same questions, in the same way, on each application.

Small lenders rely on experience and organisation to keep the pipeline under control. Large lenders rely on sophisticated computer systems that carry out much of the checking and decision-making automatically.

Both of these methods can encounter problems and delays.

A mortgage processing system that relies on the experience of a few individuals falls apart if they are on holiday or off sick.

A system run by computer falls apart if anything in the case does not meet the system’s requirements.

What does this mean?

During your mortgage application process you may find there are hitches and delays. If a lender is waiting to put your case in front of an individual that can make a decision, the speed of that response will be driven by how busy that individual is at the time. Something that takes two working days ordinarily may take a week or more at the wrong time.

A system driven problem, perhaps a computer glitch, may lock your case or indeed put the case back to square one.

Against this background, it is important to remember that well over 90% of all cases sail through with minimal problems.

Why does my mortgage lender keep asking for more information?

The profile of each application will dictate the initial information that the mortgage lender needs. The more a Lender knows, the more they may need to clarify.

For an employed applicant, the lender may ask for three month’s payslips as standard. If it then becomes apparent that the applicant has variable income such as bonus or overtime, the lender may then ask for two years P60s in order to assess the variable income over an extended period.

A self-employed applicant may be asked for two years SA302 certificates. On receipt by the lender there may be questions that will require clarification by the applicant’s Accountants.
A request for further information is often a matter of major concern to the borrower when in fact it is simply part of the process.

Timescales for valuation of properties

Mortgage Brokers lose count of the amount of times estate agents chase us for a valuation booking the day after the client has submitted the mortgage application.

When you submit a mortgage application most lenders will look to underwrite the financial position of the case before they instruct valuation (particularly if the valuation is at mortgage lender’s cost rather than your own!).

This may mean that the case will be with the lender some time before valuation is even instructed. During busy periods a lender may take a working week or more to make an initial assessment on a case. Even if that initial assessment is fine it could be six or seven working days before valuation is instructed.

Valuation instruction does not mean that the lender telephones the estate agent within the hour to book a slot for inspection. Valuation instructions go into a national allocation computer system. The result of this is that a lender confirming they are instructing valuation today, means that the estate agent may not get the call for two or three working days. Then of course a convenient slot has to be booked. This normally happens within a couple of days but in busy periods in some parts of the country we have seen several weeks to get an appointment – rare, but it can happen.

Once the valuer has visited the property, they then need to prepare and send the report. They will typically do this at the end of the working day. In practice it may be two working days before the lender has a copy of the valuation report. That valuation report will now go into the queue to be assessed which may take several more working days.

If there are issues on the valuation report for which extra surveys have been requested (for example a timber and damp survey ), these need to be booked, carried out, and the results forwarded to the valuer (via the lender) for further consideration before the valuer reports back to the lender. This can take two weeks or more.

A valuation back with the Lender and approved with a week of instruction is an excellent result, two weeks more usual, longer commonplace.

Production of your mortgage offer is not instant

When mortgage lenders approve your case for offer there is still a procedure to be followed. This means a final complete check that everything has been satisfied or perhaps also a final review by an underwriter.

Therefore a message that your offer is being produced can mean a further few working days before you will actually see your offer. This is not an indication of a problem, it is just the way it works.

Many Lenders send offers out by second class post so alllow further time for this.

The value of communication

Being clear and managing expectation makes the process is less painful for everyone.

Here at A Mortgage Now we try to make a point of letting clients know when to expect an update, providing that update on time, and confronting the situation immediately when there are delays.
There is no value in telling you what you want to hear if it does not relate to the facts of the case.

When dealing with a broker make sure the broker is clear that you expect regular updates and contract at each stage when to expect the next update. This ‘contract’ can be as simple as ‘we won’t hear anything until Monday or Tuesday, we will be back to you by close of business Tuesday with an update on your application’.

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