All the various factors that determine when your mortgage loan is approved.
Getting a mortgage is no joke. It might easily be the biggest financial commitment you make in your entire life. Not to mention how much of an emotional toll finding a home for yourself and your family can have on you.
But how long does it take to get a mortgage loan? The duration from when the loan is applied for till it is approved can vary depending on the circumstances which we shall explore below.
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What is a Mortgage?
A mortgage is a type of loan between you and a lender in order to buy a property or piece of land. When you take out a mortgage, you enter into an agreement with the lender, usually a bank, to repay them the money that has been borrowed. This borrowed money is secured against the value of your home. Which means if you cannot keep up with the repayments, your mortgage lender has the legal right to possess your home and sell it in order to recoup the money.
A mortgage is required by almost everyone who is looking to buy a property. People who do not need a mortgage are known as “cash buyers” as they have the full amount of cash that is required to buy the house.
How Long Does it Take to get a Mortgage Loan?
You can find out the amount of mortgage loan that a lender is likely to lend to you based on some information you provide either online or over the phone only in a couple of hours. This is done so by applying for a mortgage Agreement in Principle.
You will be required to provide some basic information about your financial situation and a credit check. However, this does not guarantee that you will end up getting a full mortgage until all the paperwork has been done which comes at a later stage in the process.
In terms of the mortgage approval timeline, there is no set duration specified. However, you can expect to wait around 18-40 days from the day you submitted an application to when you would get a mortgage offer. This is for applications that are relatively straightforward and the process goes smoothly. If there are some discrepancies in your application, you can expect your mortgage offer to take longer, if it even comes at all. How long does loan processing take depends on how smooth your entire application is.
In light of the COVID-19 situation, many lenders have been asking for more evidence now from borrowers in order to ensure financial stability whereas some lenders are no longer taking bonuses and overtime into account when calculating how much the borrower is able to afford.
How Long From Underwriting to Closing?
Mortgages tend to take some time even in normal circumstances because of a lot of information processing as well as a huge number of checks. The information that the lender will check includes:
- Verifying your income through wage slips, bank statements or even self-assessment returns for self-employed individuals.
- Assessing your financial commitments such as childcare costs.
- Proof of current address.
- Details of the solicitor carrying out the transaction.
- Estate agent’s details.
The lender will then conduct a mortgage valuation survey of the property in question. How long this takes depends on how busy their surveyors are. Usually it takes about a few days to a week.
This entire process is known as the underwriting process. The lender determines whether or not you would be a good risk for a mortgage loan which can be delayed if all the necessary documents that would help the lender verify your income and savings are not provided. If you have any late or missed payments on your credit report, it can play a role in delaying the process as well.
However, if your credit report is perfect and you provide the lender with all the necessary documents and information they need, you might be able to get your mortgage approval in 72 hours.
However, this approval will not be the final approval. It is likely that the approval your lender issues is only a conditional approval. Your lender might ask you for more documents in order to support your income claims before it grants you the final approval.
It does not matter whether you are buying a new home or refinancing an existing mortgage. You will still be required to wait until an appraisal of the property you are buying is complete. Moreover, you will also be required to provide proof of homeowner’s insurance when applying for a mortgage loan to help with buying a new place.
These last few steps, more specifically the appraisal process, can end up prolonging the mortgage process by adding two to three weeks before you receive the final approval.
Moreover, how long it takes to get approved for a loan also depends on credit disputes. Not only do they make you pay higher mortgage interest rates than you would pay in normal circumstances, they can also slow down the approval process significantly if you have accounts in dispute.
Another common reason that determines how long it takes an underwriter to approve a mortgage is if you are missing paperwork. If your lender asks for three years of tax returns but you only submit two, your lender is not going to magically forget about the one year of tax return you did not provide. They will just request you for that missing year of tax return again and until you provide it, the underwriting process will come to a halt. So if you wonder, why is mortgage underwriting taking so long, you might want to review the lender’s request for all the information that they needed and compare it to what you have provided them.
So, to conclude, how long does it take to get a mortgage loan mostly depends on the circumstances. It can either be quick depending on how straight forward your application is. Or a slow and delayed process if your documents are incomplete or the appraisal process is taking too much time.