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    • Mrpear
    • By Mrpear 6th Sep 17, 7:58 PM
    • 6Posts
    • 0Thanks
    Mortgage Agreement in Principle - House value? Or Loan Amount?
    • #1
    • 6th Sep 17, 7:58 PM
    Mortgage Agreement in Principle - House value? Or Loan Amount? 6th Sep 17 at 7:58 PM
    I'm a first time buyer and so, so sorry for the dumb question.

    I've seen a house I like (£325k)
    I have a 15% deposit (£48k)

    However, I have an agreement in principle for 301k over 25 years based on a 85% loan to value.

    So the dumb question....

    Does the 301k AIP mean I cannot look at houses ABOVE 301k

    Or does it mean, I could get the 325k house, and with my deposit of 48k down, I actually only lend 276k?

    Thanks chaps.
Page 1
    • aNom
    • By aNom 6th Sep 17, 10:01 PM
    • 73 Posts
    • 65 Thanks
    • #2
    • 6th Sep 17, 10:01 PM
    • #2
    • 6th Sep 17, 10:01 PM
    The AIP would be how much the bank or building society is willing to lend to you, with your £48,000 deposit you would be able to look at houses at £349,000.
    • PField
    • By PField 6th Sep 17, 10:02 PM
    • 77 Posts
    • 52 Thanks
    • #3
    • 6th Sep 17, 10:02 PM
    • #3
    • 6th Sep 17, 10:02 PM
    It means the bank will lend you up 85% of the house value, with the maximum they will lend you being 301k.
    So if house value is 325k they will lend you up to £276k ( which is within the £301k maximum so all good).
    • amnblog
    • By amnblog 7th Sep 17, 6:51 AM
    • 9,744 Posts
    • 3,761 Thanks
    • #4
    • 7th Sep 17, 6:51 AM
    • #4
    • 7th Sep 17, 6:51 AM

    Your's is not a 'dumb question', it is one we get asked every week in some form.

    Our poster about PField has given you the definitive answer on how it works, and aNOm on your maximum purchase price.

    A decision in principle has both a lending limit and loan to value limit.
    Last edited by amnblog; 07-09-2017 at 6:53 AM.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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