7 steps to getting a mortgage

If you’re looking to buy your first home, chances are finding out how to get a mortgage is pretty high on your to-do list.

As a mortgage is a big financial commitment, it’s important to carefully consider your options, to make sure you choose the right product for you.

To help to you to get ready for making a full mortgage application, a great initial step is to work out your budget, and how much you can afford to pay towards a mortgage each month. And then apply for a Mortgage in Principle (MIP). This is also known as an Agreement in Principle, Decision in Principle, Mortgage Agreement in Principle, or a Mortgage Promise.

This is not the same as a mortgage offer, which is an official agreement from a lender that they’ll lend to you and your property. You can read more about this below.

We’ve broken down the process to help you to get one step closer to a mortgage offer, and of course, your brand-new front door.

Step 1: Work out how much you can afford

It may sound obvious, but it’s important to take the time to consider all of your outgoings, alongside the level of monthly repayment you might be comfortable putting towards your mortgage.

You can calculate your estimated monthly mortgage repayments using our affordability calculator.

Step 2: Work out how much you could borrow

A mortgage calculator can be a great tool to give you an idea of how much you could borrow, based on the size of your deposit, and your income. But that’s not the only thing a lender takes into account when considering how much they’re prepared to loan to you.

Step 3: Check your credit score

There are many things mortgage lenders will take into account when deciding whether, and how much, to lend to you. Your credit score is important as it’s often the first things lenders will look at to give an indication of how well you’ve handled money in the past.

Step 4: Apply for a Mortgage in Principle

Whether you’re buying on your own or with another person, you can apply for a Mortgage in Principle. A MIP certificate is a personalised document confirming an amount of money that a lender will lend to you (subject to proofs). It will be specific to you and, together with your deposit, it can give you an indication of the property price range you can search within. So you can search for your new home with more confidence, and it can help you to get viewings faster.

There’s no commitment, and there’s no impact to your credit score. It’s just like getting a mobile phone contract. Or checking if you could get a credit card – the provider has to run a soft search. You can read more about the difference between a hard and soft credit check here.

A MIP is normally valid for up to 90 days, but different lenders’ criteria and rules will differ.

It’s worth noting that this isn’t a full mortgage offer. But you can keep all of the associated paperwork handy, as you’ll be able to use it when you’re ready to make a full mortgage application.

Step 5: Consider the types of mortgages available

When it comes to mortgages, there’s no one size fits all, so it’s important to consider your options.

Fixed-rate mortgages will guarantee you a set rate of interest for a fixed period, while tracker and Standard Variable Rate mortgages are usually linked to the Bank of England’s Base Rate, so can change over time. You can read more about the different types of mortgages available here, along with some of their pros and cons.

It’s worth noting that around 95% of all new mortgage loans taken out in 2022 were on a fixed rate.

Step 6: Consider your mortgage term

As well as the type of mortgage you take out, you’ll also want to consider the mortgage term. This refers to the number of years it’ll take to repay the loan. A longer mortgage term will mean lower monthly repayments, but it will also mean you’ll pay interest over a longer period, too.

Most lenders will offer longer terms to help spread the cost of a mortgage over 30 to 40 years, or more, depending on your age.

When you apply for a mortgage, you can choose the term you think you can most comfortably afford.

Step 7: Get in touch with a mortgage broker or adviser

Though you’re able to apply for a mortgage directly with a lender yourself, you might find it helpful to use a mortgage broker or adviser when you’re applying for a mortgage.

Mortgage brokers are qualified to give independent advice, so will be well placed to tell you which is the best deal for your circumstances. They can look at a range of mortgage products for you, and help guide you through the full mortgage application process.