What You Need to Have
• a steady UK sterling income
• a UK sterling deposit
• a credit record
• UK residency
What Is a Mortgage?
The aim of this review is to help first time buyers to understand what happens and what is needed in order borrow money and to buy a home.
The rather dry definition of a mortgage is: a loan secured against the property being purchased. The property acts as legal security, meaning that the lender has the right to repossess it if the borrower stops paying the monthly repayments. This is why all mortgage documentation carries the rather unfriendly warning:
“Your home may be repossessed if you fail to keep up repayments on your mortgage.”
A mortgage involves the following people and a property:
• You, the borrower, the one applying for finance.
• The mortgage broker, who acts as the intermediary between you and lenders, advising on suitable products.
• The property, which the lender must deem acceptable security.
• The lender (banks or building societies), who assesses your application and provides the loan.
• The estate agent, who acts for the seller (vendor).
• Solicitors, who manage the legal elements of the sale and purchase.
Understanding how these parties interact—and what lenders are looking for—will be extremely helpful in managing the mortgage application process.
Six Stages to Buy a Home with a Mortgage
We have broken down the process of applying for a mortgage into six stages below.
Stage 1 - Reviewing You (The Buyer)
The first step should always be a conversation with a professional mortgage broker. You can speak directly to a bank or building society, but they can only offer their own products, which limits your choice. A broker reviews the whole market and can therefore match you with the most suitable option.
The broker’s initial task is to gather a complete picture of your financial and personal circumstances. This includes:
• Your plans
• Family circumstances
• ID and proof of address
• A full credit report
• Income and employment
• Expenditure
• Deposit
Each element affects your eligibility, borrowing capacity, lender choice, and ultimately the mortgage deal you can secure.
Your Plans
Your broker needs to understand your long-term objectives and your level of risk tolerance. These factors shape the type of mortgage, the term, and the structure of any deal you take -such as a fixed or variable rate.
Family Circumstances
Family situation influences affordability. Lenders consider the financial responsibility that comes with dependants, relationship status, or special circumstances that may affect household expenditure.
ID & Proof of Address
Lenders require confirmation of your legal identity, as well as at least three years of address history. Being registered to vote at your current address is highly beneficial, as it assists with verification.
Credit Report
Tapper Financial Services and most professional brokers, start by obtaining your full six-year credit file, not just the score. The full report covers loans, credit cards, phone contracts, personal finance agreements, and monthly repayment records. The detailed file matters because:
• Some lenders only accept “clean” histories.
• Others specialise in applicants with historic issues.
• The overall credit score alone can be misleading.
• Errors sometimes appear in credit reports and may need correcting before applying.
A broker will help identify any issues that could cause a lender to decline your application and advise on next steps.
Income & Employment
Lenders need to know your financial circumstances in order to work out how much you can borrow and afford to repay every month. The amount that you can borrow varies from lender to lender. If there are two applicants, both incomes are taken into account. All income needs to be in UK sterling.
Lenders assess income to determine how much you can borrow and comfortably repay. Income is calculated differently depending on employment type:
• PAYE employees: lenders use gross salary.
• Self-employed sole traders/partners: assessed using gross income after expenses and before tax.
• Company directors: typically basic salary plus dividends, although some lenders consider the director’s share of net profit.
• Pension income: acceptable and relevant for later-life mortgages.
• Contract workers, including zero-hours: considered by many lenders, though criteria vary.
Income for a mortgage cannot include expenses, investments or shares.
Expenditure
Lenders examine all committed outgoings—from childcare and school fees to travel costs, maintenance, credit commitments, and student loans. These may reduce the amount you can borrow if they take up a lot of your disposable income.
Affordability
Affordability is a lender’s calculation of your maximum loan size. It is based on:
• Income
• A lender-specific income multiplier
• Expenditure
• Family circumstances
• Age and credit history
Older borrowers and those with past credit issues may find their affordability capped at a lower level.
Borrowers often over-estimate what will be an "affordable" level of borrowing.
Deposit and Loan To Value (LTV)
A deposit is required because lenders rarely finance 100% of a property’s value. Deposit size directly affects:
• Interest rates (lower Loan-to-Value ratios attract better deals)
• Lender risk
• Product availability
The Loan-to-Value (LTV) ratio is calculated as:
Mortgage loan ÷ Property value × 100.
For example, a £90,000 mortgage on a £100,000 home is a 90% LTV (£90,000 ÷ £100,000 x 100 = 90%).
Savings or family gifts are common deposit sources.
Broadly speaking, a low deposit attracts a higher interest rate as there is a higher risk for a lender.
Stage 2 - How Much Can You Borrow & The Decision In Principle / Application in Principle
The Decision in Principle / Application in Principle (DiP/AiP)
Most buyers begin by asking, “How much can I borrow?” There is no single answer because borrowing depends on income, family circumstances, credit history, type of employment, and monthly commitments. Online calculators generalise and frequently mislead, which is why a personalised review by a mortgage adviser is strongly recommended.
Once your broker has reviewed your full circumstances and identified a suitable lender and product, they will agree with you to apply for a Decision in Principle. This is a provisional agreement confirming the amount a lender is willing to offer, based on the information provided. At this point a fee is often payable to the broker.
A DiP typically lasts around three months and serves two crucial purposes:
1. You know your budget, so you can effectively focus your property search.
2. Estate agents know you are financially credible, which strengthens your position when making an offer.
Because the DiP is based on your current situation, you should avoid changing jobs, taking on new borrowing, or doing anything that might adversely affect your credit profile during the mortgage process.
Stage 3 – Finding The Property
With a DiP in place, you are ready to go house hunting, find the right property and make an offer. Remember, you are not obliged to disclose your maximum borrowing amount to the estate agent—it may be higher than required and it is not sensible to “give arrows to Indians”!
If the agent wants confirmation that you can afford the asking price, your broker can confirm affordability without disclosing the full DiP figure.
Once your offer is accepted, you can begin the full mortgage application.
Stage 4 – The Mortgage Application
Once your purchase offer is accepted by the vendor of the property, your broker can submit the full mortgage application. This requires detailed information about the property, including:
• Price
• Address
• Condition and construction type
• Age of the building
• Ongoing costs (such as ground rent or service charges)
• Tenure (freehold or leasehold)
• Solicitor details
At this stage, your broker will finalise the recommendation of a mortgage product— this usually means a fixed or variable deal for a set period. The most common deals are 2,3,5 and sometimes 10 years. This product is locked in at the time of application.
Common product types include:
• Fixed rate (a rate that is fixed and does not change)
• Tracker (a rate set at a fixed rate above bank base rate)
• Discount (a rate is set at a fixed discount below a lender reference rate)
So tracker and discount rates can change over the agreed period, but a fixed rate does not.
Your broker explain these to you and will match the product to your needs and financial position.
Solicitors
Solicitors handle the legal side of the process. Some lenders include free legal work in their product; otherwise, you must choose and pay your own solicitor. They will set up the legal contracts and carry out necessary searches such as:
• Local authority
• Environmental
• Drainage and water
• Land registry
The solicitors also handle the funds to make the payment from you to the vendor, using your deposit and the mortgage.
Mortgage Valuation Survey and Homebuyer Property Survey
Lenders instruct a valuation survey to ensure the property is worth the agreed price and physically exists. This may be:
• A desktop valuation
• An in-person inspection
The valuation is limited in scope and provides no detail about the property condition. Therefore, buyers are encouraged to commission a Homebuyer Property Survey, which examines:
• Roof condition
• Structural issues
• Heating systems
• Other important features
This is important not just for older buildings. Over recent years there have been issues with large numbers of new-build homes, so it is important to check even when there is a build warranty in place.
A property can be down-valued if the lender believes it is worth less than the agreed price. This may mean you can borrow less than planned. Sometimes buyers use a down-valuation to renegotiate the price, although lender valuations are not always definitive
Lender Request For Additional Information.
Lenders may ask for additional documentation or clarification during underwriting. This is normal and may require some patience from the borrower!
Stage 5 - The Mortgage Offer
Once both you and the property are approved, the lender issues a formal Mortgage Offer detailing:
• Loan amount
• Deposit
• Property value
• Mortgage type, interest rate, and term
• Monthly repayments
• Any fees
• The property address
• Solicitor details
• Any special conditions
• Offer validity period (usually six months)
Purchases generally must complete before the offer expires. Extensions may be possible but not guaranteed, and missing the deadline could require a new application.
Insurances
Before exchange of contracts, buildings insurance must be in place for freehold properties. Leasehold buildings are insured by the freeholder, though you may still be responsible for contents insurance.
Borrowers should also consider personal protection products, such as:
• Life insurance
• Critical illness cover
• Income protection
• Family income benefit
Having helped get you into the biggest debt of your life, a broker should always advise on suitable cover to safeguard your home for you and your family in case of death or serious illness. Remember, if you stop making the repayments, for whatever reason, the lender can repossess the property and legally evict you from your home.
Stage 6 - Exchange of Contracts and Completion
Once the mortgage offer is issued, the process moves largely into the hands of the solicitors. They complete final checks, review search results, and prepare contracts for signature.
When both parties sign, the contracts are exchanged, and a completion date is agreed. From exchange forward, the buyer is legally committed to the purchase and responsible for insuring the property (for freehold transactions). Completion is the day the transaction finalises, the money changes hands and you can take the keys to move into your new home.
Final Thoughts
Working with a broker can provide reassurance, market access, and expert guidance at each step—from checking your credit file through to choosing the right product, managing lender queries, and navigating the valuation and legal stages.
A well-prepared buyer, equipped with a strong Decision in Principle, a realistic understanding of affordability, and professional support, is far better positioned to secure the right home with confidence and clarity.