Making an application for a mortgage

This content applies to Scotland only.

Housing laws vary between Scotland and England. This page applies to Scotland only. Get advice relating to England

Once you've worked out how much money you want to borrow and what kind of mortgage you want, it's a good idea to apply for a mortgage early, so you can act quickly when you find a property you like.

When should I apply?

If you are thinking about buying a property, it's best to start looking into a mortgage as soon as possible. Once you've chosen the right mortgage for you, you should apply as soon as possible. This will help you establish exactly how much you can afford to pay for a property, and will mean you'll be ready to put in a bid when a property you want comes up.

How do I apply?

Make an appointment with your lender

Once you've chosen your mortgage, you'll need to make an appointment with the lender to apply. You'll probably need to bring along:

• three months' pay slips from your employer, or
• copies of your accounts for the last three years, if you are self-employed
• proof of the length of your contract, if you are a contract worker
• copies of three months' bank statements
• copies of 12 months' previous mortgage statements, or
• proof of regular rent payments (for example, a rent book or bank statements showing your payments)
• details of any contents and buildings insurance policies you have
• details of any life endowment policies you have.

When you make the appointment, ask the lender if there is anything else you need to bring.

Fill in an application form

You'll then need to fill in an application form from your chosen lender. This will ask for details of your income, savings and outgoings, as well as your employer, bank and any previous mortgage lender or landlord. The lender will usually contact them and also run checks with credit reference agencies for any history of bad debts or repossessions of property previously owned. You can check yourself what information the main credit reference agencies, Experian, Equifax and Callcredit hold on you - their websites give details of how to do this.

Ask for a mortgage certificate

Based on your application, the lender may give you a mortgage certificate or mortgage promise stating in principle how much you can borrow. This can be useful if you need to show the seller that you are a serious buyer, but it isn't a guarantee that you'll definitely get a mortgage for that particular property.

What happens when I find a property I want to buy?

Get the property valued

From 1 December 2008, most sellers should provide a home report, which includes a survey of the property and an energy report. However, if your mortgage lender will not accept the home report as a basis for lending you money, you may have to get your own survey carried out.

There are different kinds of valuations and surveys you can get if you are interested in a property. You, your solicitor or your lender can arrange to get the property valued but your lender will only accept valuations from certain valuers that they have already approved. If you or your solicitor are arranging the valuation yourselves, check that the valuer or surveyor you hire is approved with your lender beforehand. If your lender arranges the valuation you may get the valuation fee refunded once the mortgage is finalised.

Find a deposit

If the valuation is lower than the price you need to pay, you will have to decide whether you can find the extra cash upfront, or whether the seller is likely to accept a lower offer from you.

For example, if you are bidding £105,000 for a property worth £100,000 and your lender will only lend you 90% of the value (£90,000), you'll need to come up with £15,000 for a deposit. If you are sure you can afford the deposit, and the other costs of buying a house, you can put in an offer.

Proceed with your mortgage application

If you have made an offer on a property and had it accepted, you can formally apply for your mortgage. You can usually borrow up to 90 to 95% of a property's value (this is sometimes called the loan to value ratio or LVR), so you will have to find the rest of the purchase price as a deposit. Remember the 'value' is what the lender's valuer thinks the property is worth, and this may be less than the price you'll actually have to pay.

If the lender approves your mortgage application, they will make you a formal mortgage offer. There may be conditions attached to the offer, for example, you may have to carry out certain repairs or improvements within a specified period. The lender may withhold some of the loan until you have done this.