Offer Accepted, now what?

danielinto

Hi,

We are first time buyers and have been lucky enough to run into the property we want to live in at the first viewing and our offer, after some negotiation, has been accepted! This is great news because we can get the ball rolling, but to be honest, I haven't done a lot of homework as I thought I'd learn "as we went" thinking that it would take us longer!

Now, I think we have bagged a good price so I have some questions:

1 - What is the next step? We haven'd got an agreement for a mortgage yet and after some research I have found that the cheapest we can probably get is the Britannia 5 year fixed rate deal. Our mortgage will be on a 90% LTV and their 5.69% is the lowest I have found, with a reasonable arrangement fee.

2 - When the property is valued, what happens if the valuer thinks it is worth more that what the vendor has accepted? We think that there is a strong possibility that this may be the case. Will our LTV decrease because of this or does the purchase price prevail?

3 - Back to the mortgage, Britannia does not seem to accept business from brokers (at least none of the ones we have talked to have mentioned them, I only found them on a comparison done over the internet!). What are the implications of going to them direct rather that using a broker? According the the MSE "cheap mortgage guide" it seems to be a good idea to go with a broker...

I'm sure I'll have more questions as we move forward with the purchase (the vendor only agreed this morning to our offer!) but would love any advice from those more experienced in buying and selling housed

Thanks

Daniel

feisty1

Yr first time buyers, made an offer on a property without having a mortgage promise in place!!
If your going to do it thru the internet, you will not receive advise, therefore at a later date you feel this mortgage is actually not the right one for you...you have no comeback as you haven't taken advice.

danielinto

We have taken advice as to how much we can afford to borrow and what kind of mortgage is right for us from an independent mortgage adviser. We haven't gone down the route of a mortgage in principle and this seems not to be a problem as the estate agent (Connells) also had a mortgage adviser and they assesed us before putting the offer and we are well within the maximum that they suggested.

feisty1

You haven't taken advice as you have no product recommendation. A very incompetent mortgage advisor who encourages you to offer on a property before any decision in principle has been run (particularly in an estate agents office).........an adviser cannot say 100% a lender will accept you before submitting a DIP, they can say where you'd fit as looking at you on paper but no guarantee until submitted to lender

opinions4u

We are first time buyers and have been lucky enough to run into the property we want to live in at the first viewing

Why not spend an hour looking at least a couple more properties? This is one hell of a big decision, and while you may well come back to the first, surely it is worth investing a small amount of time comparing what you will get for your money, rather than jumping in feet first?

and our offer, after some negotiation, has been accepted!

That's good news, but don't forget you are buying in a falling market. Expect the value of your house to fall after you move in.

1 - What is the next step? We haven'd got an agreement for a mortgage yet and after some research I have found that the cheapest we can probably get is the Britannia 5 year fixed rate deal. Our mortgage will be on a 90% LTV and their 5.69% is the lowest I have found, with a reasonable arrangement fee.

While I think it's right that you do your research, I really think you need to talk this through with a professional. I'd recommend an independent whole of market mortgage adviser. They will be able to search out the best deal and then apply pressure on the lender to get you application for mortgage through to offer. At the very least, if you are totally sold on the Britannia, get in to see one of their branch mortgage advisers face to face so that you can understand what happens now.

2 - When the property is valued, what happens if the valuer thinks it is worth more that what the vendor has accepted?

Most lenders base their 90% against the lower of valuation or purchase price. So if the valuer overvalues, this will change nothing in the eyes of a lender. To be honest a property is worth what someone is prepared to pay for it. In the current climate I'd be gobsmacked if a valuer said it was worth more. You could have a problem if the valuer says that it's worth less as the lender will only then lend 90% of the value.

3 - Britannia does not seem to accept business from brokers (at least none of the ones we have talked to have mentioned them, I only found them on a comparison done over the internet!). What are the implications of going to them direct rather that using a broker? According the the MSE "cheap mortgage guide" it seems to be a good idea to go with a broker...

The advantage of going direct to the Britannia is that you get the deal you've found and researched. They probably don't accept business from brokers because they chose to reduce demand for mortgages by restricting this channel. For me you miss out on their market knowledge, negotiating skill (not so much rate, but getting your application through to offer, rather than decline) and skills in other areas like insurances. If you go direct to the Britannia, make sure you look in to things like buildings and contents insurances yourself too. Do you know how much life cover you need? Should you portect more than just the mortgage debt? How about critical illness cover? Should that be separate, or linked to the life policy? Do you need these insurances at all? How about redundancy protection? Can you get this standalone or do you have to package it up with expesive sickness cover? Would a PHI policy be better for you? I don't know the specific answers to these questions for you. Britannia may only have a limited product range that is expensive and made up of a 'one size fits all' nature.

I'm sure I'll have more questions as we move forward with the purchase (the vendor only agreed this morning to our offer!) but would love any advice from those more experienced in buying and selling housed

I'm sure you will. You sound a little naive and I think at the very least you should spend time with a professional face to face to ask some of these questions.

To try and answer the question you:

1) Need to apply for a mortgage fairly quickly, or you are giving your vendor time to find a different buyer. Make sure you know what proofs of income you need before applying to save time later on. 3 months payslips? Last P60? Bank statements? ID and address verification?

2) Which solicitor or licenced conveyancer are you going to use? The estate agent (who acts for the vendor) could recommend one. The lender could too. Alternatively, and preferably unless there's an incentive to do something else, get family or friends to recommend one.

3) What type of survey do you want? A simple valuation or something more in depth and, of course, expensive. It should really be the latter. Additionally, if you've got any friends in the building trade get them to come and look at the property with you and identify any flaws that they can see.

4) Assuming you are accepted in principle for the mortgage, you hand over the valuation fee/survey fee. And wait for the report.

5) When you see the report, there may be inclusions that allow you to renegotiate the purchase price or request the work is done before exchange of contracts. The vendor is under no obligation to agree to this, but if they want to sell in a poor market ... You may also see things that remind you how expensive owning a house is. Work out a budget for ongoing maintenance. Make sure you know whether the survey report is talking about basic maintenance or significant structural issues.

6) When the lender gets the valuation report they may interpret that they need extra work doing to the property either before completion of the purchase or within 6 months of completion. Again, this is negotiating time. They may reduce the size of their offer and only release the amount of the reduced funds when they know the work has been done.

7) Assuming the lender is now happy they will issue the mortgage offer to you and your solicitor.

8) The solicitor should talk though the terms and restrictions of the offer with you. Many don't.

9) The solicitor will then start doing the land searches and other proof of title work. They can commence this earlier, but you run the risk of bills even if the mortgage is declined. So I'd usually wait until it's offered.

10) A date for exchange of contracts and completion then has to be negotiated throughout the whole chain (you buy their house, they buy their house, those people buy the next one etc right up to the top, where somebody is probably buying a dead person's house). This is not always straight forwards and could well change, very frustratingly, on more than one occasion.

11) You sort out a van and some mates and move in.

12) You then fall out with your partner, split up and find yourselves in negative equity, having to sell a house at a loss and pay a massive early redemption penalty to your lender. Alternatively, you both refuse to pay the mortgage because it's the other partner's fault, end up repossessed and can't buy a house until well after the year 2020.

Have I missed anything chaps?

Slightly different if you are buying in Scotland!

asandwhen

Are you a member of a union? Britannia BS offer discounted mortgages to union members.

Cliveski2009

I believe C&G offer the best 90% LTV mortgages at the moment (but this may change overnight!) 5.69% fixed for 2 yrs, 6.09% fixed for 5yrs (£895-£995 product fee applies which is put on the mortgage).

Any idea how long between mortgage approval (in principle) to actual mortgage offer?

cte1111

It is very unlikely that the valuation will come back higher than your offer.

When I bought my first house, the vendors had 3 full asking price offers, this would tend to indicate that the house was under-valued (the market wasn't particularly fast moving at the time). The survey came back with nothing major wrong with the house, but still knocked £1500 off the asking price.

Xinpei

Hi there, congrats on your offer being accepted. I think the C & G mortgage is an online exclusive? Not sure but having spoken to a mortgage advisor at Countrywide, she reckons no one with a 10% deposit has been successful with their application even though it says the max LTV is 90%! We also originally had a 10% deposit but managed to somehow scrape together an extra 5%.

Hope you will be able to get your mortgage without much trouble. Let us know how it went!

Cliveski2009

It's not online exclusive but doing so online means you save £100 off the product fee.
Britannia do 5.69% for 5 years fixed with a £549 arrangement fee (of which £150 is non-refundable booking fee). 10 years fixed is at 5.89%. These offers are for 75-90% LTV.

danielinto

Cliveski2009 wrote: »

It's not online exclusive but doing so online means you save £100 off the product fee.
Britannia do 5.69% for 5 years fixed with a £549 arrangement fee (of which £150 is non-refundable booking fee). 10 years fixed is at 5.89%. These offers are for 75-90% LTV.

This is the offer I am interested in (the 5 year one) although I am tempted by the 10 year one... historicaly, these are low interest rates and, even though there are rates that are a lot lower, less than 6% in this market is good value in my eyes.

I guess a visit to Britannia tomorrow is in order, see what they say! Anyone have any idea how picky they are?