If you are switching to a new lender the switching process is the same as applying for a new mortgage. You can apply for a mortgage in two ways:
Documentation you will need
It depends on the lender but usually:
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Proof of your identity: such as a valid passport or driving licence.
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Proof of your current address: such as a household bill in your name.
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Proof of your income: including your latest P60 and at least three recent salary slips.
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Evidence of how you manage your money: usually current account and loan account statements for the previous 12 months.
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Evidence of any savings you have.
It’s a good idea to keep photocopies of any documents you give to your lender or broker.
Personal information you need to make an application
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Employment status – lenders will want information/proof as to what type of employment contract you are on. For example, permanent, contract, full-time, part-time etc.
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Your income – lenders will look at your annual income and some may take bonuses or overtime into account. Some lenders may factor in rental income if you plan to rent out spare rooms.
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Your age – and also the number of years left until you retire.
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Outgoings – in addition to any loan repayments, lenders will look at any financial commitments you have, such as childcare costs.
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Value of your house – this is the market value, or purchase price of your house. You will need an up to date valuation.
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Amount you need to borrow – how much you are looking to borrow. This will be based on what you currently owe, called the redemption figure. You can get this figure from your current mortgage lender.
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Direct debit – a new direct debit will have to be set up with the new lender, check that when the final month’s payment is made to the old lender, that you cancel the direct debit in writing with your previous lender and the bank you have your current account with to ensure no further payments are taken.
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Guarantor- if anyone will act as a guarantor, by agreeing to repay the loan if you are not able to. This may be a family member.
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Mortgage protection insurance – if you are switching will your original policy cover the mortgage? You should notify your insurance company and tell them you are changing mortgage provider as they will have to note the new lender on the policy.
After you’ve applied
Many lenders give ‘approval in principle’. This means that your lender approves you for a mortgage of a set amount, based on the details you provided in your application. However, the ‘approval in principle’ will only last for a period of time, usually 3-6 months and the lenders will also have other terms attached to your approval such as:
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Your mortgage offer will have an expiry date – you must draw down your mortgage before this date. Once a loan offer expires, you will need to apply again and if your circumstances have changed or your lender’s criteria have changed, you may not get approval again.
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The interest rate shown on your mortgage loan approval is not necessarily the rate you will pay. Usually, the interest rate for your mortgage will be set only on the day that the money is actually lent to you.
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Keep a copy of all correspondence and documentation in a safe place.
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When your mortgage is approved, your lender will ask you to fill in a direct debit form so your repayments can be collected from your bank account.
How long will it take to switch?
There is no specific time-frame applied to mortgage applications. The process depends on many different factors such as gathering of documentation, valuation surveys and putting mortgage protection in place etc. but it is likely to take a couple of months.
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