With all the twists and turns involved in obtaining a mortgage it can sometimes feel like you are in a game of Monopoly but do not despair. It is likely that you’ve worked hard to get to the point where your mortgage offer in principle (MIP) has been issued to you. So – what happens next? Mortgagez are here to guide you through the next steps…
Mortgagez can help you appoint a solicitor
Probably one of the most important next steps is to appoint a solicitor to help manage the legal side of your mortgage. If you’ve never appointed a solicitor for something like this there’s no need to worry – at Mortgagez we provide you with a range of solicitor options for you to choose from via our portal. This not only makes it easy and straightforward for you to compare quotes based on price, location and rating but also ensures that everything you need for your mortgage is all under one roof with us. Simply visit our portal and find out how easy it is for you to find and appoint a solicitor today.
What it all means
Going from a mortgage in principle (MIP) to a formal mortgage offer is a big step, and the good news is that you’ve already done a lot of the work in order to get there. However, there are still some other important things to be done in order to secure your mortgage.
A mortgage in principle means that the lender is happy to provide you with a mortgage, based on the information provided to date, together with the checks that were carried out during the application process. Moving to a formal mortgage essentially means that you are committing to borrowing the required capital in order to secure an actual property. Now is therefore the last chance to make changes. For the most part, if you have been working closely with your mortgage adviser there should not be any need to change anything significant at this point in the journey.
However, there are things that can change that are outside of your control such as your income and the price of the property you are purchasing, so it’s important to let your lender know as soon as possible if either of these things change.
For example, the seller may decide at the last minute that they want a higher price for the property. This process can be mediated by the estate agent for the property, and it’s always best to speak to your mortgage adviser to access your mortgage options for a higher purchase price. Or, you may even end up paying less than you initially agreed for the property and again you must let the lender know. For example, independent surveys may uncover things that affect the valuation and ultimately the sale price which you may have to re-negotiate based on your findings.
How to accept and complete the mortgage offer
This part of the process will be guided by your solicitor as he or she conducts what is known as the conveyancing. Conveyancing is the term used for ensuring that you are meeting all of the necessary legal obligations required as part of your property purchase. It also ensures that the transfer of the legal title of a property from one person to another is carried out correctly. If you are remortgaging (i.e. remaining in the same property) your solicitor will also be required to settle the balance in full with your previous lender before setting up your new mortgage so that the new monthly payments can commence. Unfortunately conveyancing is not something you can avoid in the process of obtaining a mortgage. When you are remortgaging, most of the time solicitors fees are included in your new mortgage deal but there are some occasions when this is not the case.
The good thing is that your appointed solicitor also must ensure that your own rights are protected during any property transaction. This may involve carrying out various searches or enquiries against the property you are planning to buy in order to help identify any potential problems with it before you complete the purchase.
As part of the conveyancing process, there will be documentation for you to sign and in many cases this can be done online via services like DocuSign. Depending on whether you are in England, Wales, Scotland or Northern Ireland these processes will be slightly different though again your solicitor will be aware of the necessary steps and can advise you accordingly.
After your formal mortgage offer has been issued
You’re nearly there now! After your formal mortgage offer has been issued you are well on your way to securing your property. For remortgages it’s a bit more straightforward after this point, but if you are a home mover your solicitor will be preparing to exchange contracts with the vendor’s solicitors (a binding agreement which means that you are committed to buying and the vendor is committed to selling subject to all legal requirements being satisfied).
Once you and the vendor have agreed on a completion date (which will also be the day you receive the keys and can physically move in), contracts can be exchanged. At this point you are usually required to pay a deposit of 10% of the property value with the balance of any deposit and your legal fees to them be paid on completion.
You need to bear in mind that mortgage offers do not last forever and you will have a predetermined amount of time in which to complete the purchase and use the money your lender has provided for your mortgage. Otherwise you may have to re-apply for the same mortgage and you may not get the same mortgage deal again.
You will usually be legally required to obtain buildings cover on your property and it is advisable to also have contents insurance too. Whilst obtaining buildings and contents insurance Mortgagez recommends exploring other insurance options including but not limited to life insurance, critical illness cover and income protection. The good news is your mortgage adviser at Mortgagez can help you with this part of the process.
Then all you need to do is move in! Good luck – we’re always here to help you.
YOUR HOME MAY BE REPOSSESSED IF YOU DON’T KEEP UP REPAYMENTS ON YOUR MORTGAGE
Any guidance and/or advice contained within this document is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK. Any technical or regulatory information contained within this document was correct at the time of producing it but as it may be subject to change it should not be exclusively relied upon when making a financial decision. The Financial Conduct Authority does not regulate advice on Buy to Let mortgages.
Article written: June 2020
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