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A mortgage lender will assess whether they are willing to offer a mortgage, depending on the borrowers ability to repay the mortgage (their financial and employment status etc), as well as the actual value of the property.

In order to establish the borrowers capacity for repayments, the mortgage lender will require evidence of their current financial situation, including income and expenditures and a form of credit rating to demonstrate the borrowers previous record of loan repayment. Without these forms of evidence if is often very unlikely that a mortgage will be allocated. It is also important to consider that the credit rating and financial status are the major determining factors, as far as the final repayment rates and the actual loan amount are concerned. Borrowers with poorer credit ratings are most likely to receive higher interest rates, since this will obviously be more of a risk for the mortgage lender. Furthermore the financial standing of the borrowers will effect what percentage of the property value estimation will be offered. Those with higher earnings will inevitably be offered a higher percentage of the total property value in their mortgage, since they are seen to be more likely to be able to cover the total repayment.

As far as the value of the property is concerned, a mortgage lender will commission an independent property valuer or surveyor to determine the value of the property and therefore whether they are willing to lend for the property and if so how much.

When the mortgage lender finally reaches a decision, the borrower will be contacted officially. If the mortgage application is successful, the mortgage will issue what is known as an ‘offer of advance’. This details the mortgage amount as well as the terms and conditions of lending and repayment. For example, if on inspection by a surveyor, it was found that the property was not structurally sound, the mortgage lender may include terms dictating that these flaws be rectified before the entire mortgage amount is allocated to the borrower. The repayment interest rates are also tailored to the individual situation of the borrower, and it is essential that during this early stage of the mortgage allocation process, the borrower seriously evaluates their ability to cover the repayment costs, because to fail to meet the repayment deadlines and thus violate the terms and conditions set out by the mortgage lender, is to put your home at great risk. Obviously not all applications for a mortgage are successful, and this is usually due to the fact that the borrower is unable to provide the evidence of financial status or may have a poor credit rating.

Nonetheless specialist mortgage lenders or mortgage lending companies do exist, who are often able to make special concessions for borrowers in these situations. This process however, will clearly take much longer. If it becomes evident that it is simply not feasible to offer a mortgage, a mortgage lender will usually make referrals to a financial advisory service, or oftentimes are able to offer a similar consultancy service themselves.