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What most people fail to understand is when they apply for a mortgage, there is no certainty that they will be offered one. Each lender has their own lending criteria and all applications are assessed accordingly. Major considerations for the lender are the amount you want to borrow, the property you are targeting, your employment status and your credit history. Lenders must do this for satisfying themselves that their loan will be repaid.
Once the lender satisfies himself initially with your application, they will give you an agreement in principle. This is a confirmation that the lender is willing to lend to you and this allows you to book a suitable specific mortgage product.
When you make a formal application, and the lender finds you have met all of their requirements, you will be given a formal offer. With your acceptance, this offer will be sent to the solicitor of your choice as a confirmation that the lender is ready to provide the money. When it is time for exchanging of contracts, the money will be transferred.
There may be conditions on the offer requiring you to take out buildings insurance immediately for the property that you have proposed to purchase. This will keep you covered, if something happens that affects the value of the property.
That is the end of your involvement with your lender. Once your solicitor is satisfied with the offer of the mortgage, contracts can be exchanged. After this, you only wait for the completion day. On this day, the property is finally yours and you may move in.
Although the above-defined process looks very straightforward and simple, there are several pitfalls that you must strive to avoid. One of the best ways of doing this is a great mortgage broker. He will save you a lot of effort, time and money.
There are two major types of brokers. One of them is an independent broker working on his own. The other type is tied to some bigger lender like a bank. The difference is the tied lender will be able to show you only those products that are handled by the lender firm and this may be a limited range. However, he will not charge you, as the firm pays him.
On the other hand, the independent broker has no such restrictions, but he will charge you a fee.