Today I want to address a question that I’ve been asked probably more than any other over the last 13 years, how long does it take to get your mortgage offer? There’s no right way to answer this question because every lender is different, but the stock answer for me is anywhere between 4 to 6 weeks. However, normally we can get the application done and the offer completed inside this time.
Let’s have a look at the various factors that affect how long it will take to process your mortgage application.
- Lender service levels
The first thing to consider is the lender’s service levels at the time you apply. If you imagine that lenders are attracting buyers and consumers to their products by pricing, rates, offering fee deals and all this sort of stuff, they can only take on certain amounts of business at any one time. So what a lender will do is price themselves very keenly so that they appear at the top of rate tables and everyone thinks, “oh that’s a great deal, I’m going to apply for that”. They take on bucket loads of applications, but they don’t necessarily change the amount of administrative staff they have to deal with those applications. What’s the result? Well, the result is that their service levels start to fall.
It’s a good idea to make sure that you’re aware of the service levels of the lender you’re applying to and compare that to what you need to do in the timeframe for buying your house. If you’re under a very time precious purchase (or remortgage because your rate’s about to end) then it might make some sense to give a little bit away in interest rates. This would mean that your monthly payment might go up slightly, but you’ll get it done more quickly and avoid paying the standard variable rate of your lender. Or indeed avoid losing the house.
- Your personal circumstances
The second thing that can make a difference to how quickly you can get your mortgage offer is your personal circumstances. If you’re employed with no major outgoings and a good deposit, then the chances are the documents the lender are going to wish to see are going to be minimal. Whereas if you are someone with a more complex situation, perhaps someone that’s newly self-employed or has a history with credit issues, then they’re going to ask for more documentary evidence to be able to underwrite. Clearly, the more they need to see, the longer it takes to go through the process and that can delay how long the offer is going to take.
- Your lender’s underwriting process
Another factor to consider is that each lender will have a different underwriting process. Some are very document heavy and will want to see all your payslips, all your bank statements, all your accounts and tick it off one by one. Other lenders have started to move into the digital age a bit more and are using tools like auto income verification, whereby they can check that the income declared on the application matches that which is going through your bank account and they can do that electronically.
Obviously the more that’s done by machine, the quicker the process which means you’re more likely to get your offer more quickly. A good broker, a good advisor will know these different systems and will be able to factor that in when they’re making their recommendation to you to make sure you get the offer as quickly as you can.
- Other stakeholders in the process
Now the fourth thing I would say that’s really important to remember is that it’s not just you and the lender involved in this transaction. When you apply for a mortgage, there’s all sorts of third party contacts that might come into play to enable you to get your mortgage offer. The major one here will be a surveyor. When you’re buying a property, a lender’s going to instruct a surveyor to go and value the property, to make sure it’s suitable for mortgage purposes. Now, we don’t know, and you don’t know, and the lender doesn’t know what the surveyors diary is like when you apply for the mortgage. You might get the application in on a Monday, they might instruct the valuation on the Tuesday or the Wednesday, but then the surveyors got no availability to actually physically go and see the property until maybe a week, sometimes even two weeks later, depending on how busy the market is in that area. Clearly that’s going to delay your mortgage offer.
Another example of that would be accountants. Sometimes lenders will want to write a letter to an accountant or ask for an accountant to write a letter to them when dealing with self-employed clients. Again, accountants are busy people. They may have workloads that don’t allow them to respond as quickly as they would like. So be aware that it’s not just the lender and you in the transaction.
- Not using a mortgage advisor or broker
The final point to mention is that that best way of making sure get your mortgage offer quickly is to use a good mortgage advisor or broker that is on top of their admin. It’s in their interest to get your mortgage off as quickly as possible. When you’re choosing a mortgage, when you’re looking at mortgage advisors, look at the reviews. See what other people are saying about them. Go on personal recommendation and get someone that you really feel comfortable with. Because if they’re not on it, then it could delay things even further.
Hopefully you’ve found this useful. Of course, we’re always just a phone call away and happy to talk through your circumstances with no obligations. To get in touch, click here.