A little piece of history was made last month: the first digital mortgage was signed in the UK for a house in south-east London. While this may not sound like much from the offset, modernising the mortgage system across the country could make home sales much quicker and easier, and it could open up the market for plenty of new buyers. To get to grips with what this first step means, here's our quick guide to the new system.
What is a digital mortgage?
You’ve been able to apply for mortgages online for a while, but one thing has been preventing a fully digital mortgage: having to head to your bank or solicitor’s office to sign papers in front of a witness. With this new system, you simply enter your details on a secure online form to digitally sign the papers, before your deposit is transferred as usual.
Is it secure?
The security you’d normally get from having a witness confirm your identity will now be provided by GOV.UK Verify. This government-run site asks you for a selection of personal data and cross-references it with information stored by bodies like the DVLA and trusted partners such as the Post Office, Experian and Barclays. In other words, instead of having a bank clerk or solicitor check your passport, government computers will check them against their records.
Why bother with a digital mortgage?
The main advantage is that you’ll save time. You won’t have to get signatures witnessed or risk documents being lost in the post. It’s also more convenient because you can log in and sign the deed at any time, which should mean you could secure a mortgage in principle before beginning your house hunt.
What are the risks?
With any online technology, there’s always a security risk if you don’t keep your computer up to date and protected against viruses. GOV.UK does some of the work in storing data in multiple places, avoiding unnecessary information sharing and meeting international security standards.
Interested? The good news is that the Land Registry is working hard to have everything ready to roll out nationally as part of their changes to the conveyancing system. So you'll hopefully see the option on your next mortgage application.