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Mortgage Basics – Affordability Assessment & Applying for a Mortgage

Dec 15, 2016


You’ve been saving for a deposit and you think you might be able to apply for a mortgage and buy your own home – but what will actually happen and what information will you need to provide? We describe our process below, but this may vary slightly from lender to lender.

1. Contact a lender:

If you think you’d like to apply for a mortgage, you might want to complete an online mortgage calculator to see if you could borrow enough money.

If you think you can borrow enough you’ll need to contact a mortgage lender so they can carry out an affordability assessment to see whether they might be able to provide you a with a mortgage. Mortgage lenders must assess the level of monthly payments you can afford and the amount they could lend.

2. Affordability Assessment:

During an affordability assessment you will need to go through your income and outgoings. You will need to provide:

  • Detailed information on your income (including child maintenance, second jobs or bonuses)
  • Detailed information on your outgoings (including credit cards, loans, bills, living costs and more)

Everyone applying for the mortgage will need to provide the above details. If you meet all the affordability requirements by the lender you can apply for a Decision in Principle. (DIP).

3. Decision in Principle (DIP):

If you meet all the affordability requirements and you’re happy with the amount you can borrow you can apply for a DIP. This explains roughly how much you can borrow and allows you to search for and put in an offer for a relevant property. A DIP doesn’t guarantee your lender can definitely lend to you – they still need to check the value of your chosen property, ID, documentation on your income and outgoings and more.

4. Mortgage Application:

Once you have found a property you need to contact the lender who provided you with your DIP and speak to a mortgage advisor to apply for a mortgage. You will need to provide evidence of the income and outgoings you declared in your assessment. It’s advisable to have the following ready:

  • Identification
  • Current bank statements
  • Recent payslips
  • Any benefit letters if relevant
  • Any relevant bills/statements

Once you have provided all the documentation the mortgage lenders will request a valuation.

5. Valuation:

Before a lender makes an official Mortgage Offer they will need to verify the property you wish to purchase is not worth less than the cost of the mortgage you’re applying for. A Basic Valuation Report will be carried out to confirm the value. For more information on valuation reports read our article here.

6. Mortgage Offer:

Once all the documentation has been verified and the valuation report agrees with the asking price of the property your mortgage lender will make you a formal Mortgage Offer.   You have now applied for a mortgage and received an offer – you can progress with the purchase of your new home.

If you would like to apply for a mortgage, contact our friendly team on 0800 378 669 or contact us online here.

You can also request a copy of our Mortgage Guide, which is packed with useful information on the full mortgage process – here. 

Read all the other article in our ‘Mortgage Basics’ series:


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