Underwriting: What Happens once my mortgage application is submitted?

You’ve found your dream home, you’ve met with your broker to sign the paperwork, and your mortgage application has been submitted to the lender.

Now comes the waiting.

It can often be an anxious time for a lot of people, as the mortgage underwriting process can feel a bit mysterious. So here’s some insight into what’s going on behind the scenes.

 

Meet the Key Players.

Let’s introduce the individuals who play pivotal roles in the UK mortgage underwriting process:

1. Mortgage Underwriter: Picture the underwriter as a financial detective. They work for the lender and are responsible for reviewing your financial documents, verifying information, and assessing risk. They use their expertise to make informed decisions based on established lending guidelines and regulations. Their goal is to ensure that the lender’s requirements and regulatory standards are being met.
2. Mortgage Advisor/Broker: Consider your mortgage broker as your trusted guide throughout the journey. They assist you in navigating the mortgage application process, offering valuable advice, assessing your needs, and helping you find the most suitable mortgage product. While they may not directly engage in underwriting, their expertise is instrumental in preparing a strong application, and they will liaise with the underwriter on your behalf.
3. Valuation Surveyor: The surveyor is an independent expert property appraiser. They assess the market value of the property on behalf of the lender. They consider factors such as the property’s location, condition, and recent comparable sales to determine if it provides adequate security for the loan.

 

Stages of UK Mortgage Underwriting:

Let’s take a tour through the stages of the underwriting process:

1. Initial Assessment: After your mortgage application is submitted to the lender, it joins a digital queue of sorts. Generally, it takes a few days to reach the top of the queue, where it will be reviewed by the underwriter. The underwriter will conduct their initial assessment; which involves reviewing your documents (such as bank statements, pay slips, tax returns, and proof of identity and address). The intention is to verify your income, expenditure and other financial details to gain a comprehensive understanding of your situation. They’ll consider factors such as income stability and debt-to-income ratio, too.
2. Credit Check: The underwriter will also take a deep dive into your credit history. They want to get to know your creditworthiness better. They examine your payment history, outstanding debts, and any previous credit blips. Remember, a healthy credit score is a strong ally in the mortgage underwriting process.
3. Further information request: Underwriters will frequently contact a broker post-application submission to request further information, explanations or documentation. If this happens during your application – don’t worry! The underwriter is requesting this information so that they can gain a better understanding of your circumstances, or perhaps to ensure they meet a regulatory requirement that the lender is obliged to fulfil. Remember, mortgage lenders want to lend, as long as the circumstances are right. It’s how they make their profit! So the requests for further information are best interpreted as the underwriter looking for ways to say yes, rather than ways to say no. Once your broker provides further information, it will re-join the queue to be assessed, so it can be a few days before you hear back from the underwriter again.
4. Property Valuation: The lender instructs an independent surveyor to assess the value of the property you wish to buy. The surveyor takes a close look at the property’s condition, location, and recent comparable sales in the area, and then writes up a report for the lender, to advise on whether the property is suitable to secure the new mortgage against. A mortgage lender cannot provide a mortgage without a satisfactory valuation report.
5. Underwriting approval: Congratulations! Once the underwriter is happy with their assessment, your application will be approved and a formal mortgage offer will be issued by the lender. Your conveyancer will pick up the baton from here and get the legal aspects wrapped up. And a few months later you’ll be picking up the keys to your new home!

If this has got you thinking, we’d be delighted to help.  Get in touch and we’ll talk you through your options, or sign up to our monthly newsletter, to keep your finger on the pulse. 

 

Helen Peel – 2nd June 2023