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Mortgage guide
Exchanging contracts
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Once you are happy with the survey and you are sure that the price you have agreed is still appropriate you can make a formal application for a mortgage. Before a lender issues a legal mortgage offer, your application will be underwritten - at which time you will be assessed on your ability to support the mortgage.
The mortgage application
This process can be exacting and a great deal of information is collected by the lender in making its assessment, examples of which include:
If your lender finds the application satisfactory, they will produce a mortgage offer detailing the conditions of the loan and confirming the interest rate payable. You should read the mortgage offer carefully and ensure that the terms and conditions are acceptable. Your mortgage broker should also have explained to you the terms and conditions of the mortgage and why it is the most suitable for you. However, you should also ensure that your solicitor has read the mortgage offer and has fully explained any terms and conditions that you do not understand.
Your solicitor normally needs the mortgage offer in order to exchange contracts with the vendor.
Now, it is time to move on to a formal exchange of contracts.
Exchanging contracts
By this time, your solicitor will have finished all the paperwork, such as carrying out a local Search, and a draft contract will have been approved for signing. The contract is a legally binding document that commits both you and the person selling their property to the deal. There's no backing out at this stage. That's why it's essential that you have completed the following steps before you sign and exchange the contract:
Once this has all been resolved, you will sign the contract and give it to your solicitor, and then he or she will hand it over to the person selling the property in exchange for the contract that they sign. From now on, you are both committed to the deal and neither of you can pull out.
Once you have exchanged contracts, you become legally responsible for things like insuring the property, unless you are buying a leasehold flat. Your mortgage company may also require you to take out specific insurance with a company that they choose at this point.
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