What is Mortgage Underwriting?

The mortgage underwriting process is a really important part o the application process. It is when the lender will look at the applicant’s ability to repay the loan and decide to approve the loan or not. Every lender is different but there are usually some typical steps involved.

Affordability Assessment
Once you have submitted your application along with your supporting documentation, the lender will review your application to assess your financial situation. They will consider your income, outgoings, and other financial circumstances. The lender will assess whether or not you can afford to make the monthly repayments.

Creditworthiness

Following the affordability assessment, the lender will assess your creditworthiness. The lender will look at your credit history and any previous experiences of borrowing money. Once everything has been checked, they will decide if they are going to approve the loan or not. If you get approved, you will be asked to sign a mortgage offer document, which sets out the terms and conditions of the loan.

What do underwriters check?

Your age

Most mortgage terms are more than two decades; therefore, the underwriter will look at your age to see if the term runs past your expected retirement age, making sure the repayments will remain affordable in the future.

Your income and expenses.

The main thing your lender wants to know is if you can afford the repayments on the mortgage. They will therefore check things like how much money is coming in and going out. They will also consider if you already have any debts, you are currently paying back.

Your credit report

The most important thing an underwriter will be looking for is to see if you have ever missed a payment or defaulted on debts in the past. Having a good credit report makes you appear more attractive and less risky to a mortgage lender.

The house you are buying

Even though the mortgage valuation is separate to the underwriting, a review of the report will be considered and will form part of the underwriter’s decision-making process.

If you require assistance with your mortgage, contact our friendly Peterborough-based mortgage advisors today to get started.