When to arrange mortgage

KTJ_2

Hi,

We have sold our house and have just had an offer accepted on another. Unfortunately, we have entered a chain.

Im confused about when I should be getting my new mortgage in place. I have spoked to some advisors who have told me the amount I could borrow but said to come back to them when i have had an offer accepted on a house.

If i get a mortgage sorted out now, what happens if completion doesnt take place for months. Will I be tied to the mortgage rate I arrange now or will I be able to select a different one if the deals have improved when completion date is nearer?

Thanks in advance

dunstonh

If i get a mortgage sorted out now, what happens if completion doesnt take place for months. Will I be tied to the mortgage rate I arrange now or will I be able to select a different one if the deals have improved when completion date is nearer?

If you go in for a mortgage deal now, that will be the deal you get unless there is a clause in there saying the completion has to occur by a certain date. With long term interest rates on the rise, it is unlikely that deals will improve, although short term offers may appear from time to time.

Another issue you should be more concerned about is that it can take a number of months to get the lending sorted and place. It could end up you are the one everyone is waiting for if you don't get the mortgage sorted soon and that could result in you losing your property or your buyer pulling out.

dwsjarcmcd

KTJ,
Really depends on the product you are applying for, primarily because with most (fixed rates especially) you will need to pay an application (or reservation fee) which will be non-refundable of around £200 - £300. If deals have improved meantime then if you switch within the same lender, they will ask for a new fee. If you switch lender, then you will lose the fee. Remember prices of fixed rates can move up and down quickly, so there isno guarantee either way.

MortgageMamma

KTJ
You could apply for a mortgage now and add all fee's onto the loan amount, this way if you choose another deal nearer the time (unlikely in current climate) you will not lose any money. If you are concerned about paying interest on the added fee's phone up and pay them off on switch day after completion (assuming mortgage product allows this). Also, it is important that you complete within 6 months of the mortgage OFFER being issued, or you will have to reapply. DunstonH is right you don't want to be the one responsible for holding the chain up as some buyers/sellers resent that and get twitchy. See a whole of market broker as soon as possible and sort out your mortgage as soon as possible.

MM

herbiesjp

Agreed - I would suggest getting the mortgage agreed now asap at whatever is the best deal for you now.

YOu really cannot wait until the last minute to get the mortgage in place, as it can put the whole chain in jeopardy. If rates go down and you are on a tracker rate the you deal will go down also. If you are on a fixed rate, then you may be paying slightly more (if indeed rates go down) however at least you will have the keys to your brand new house in your hand, and you will not have agents/solicitors/vendors/buyers in the chain asking you what you are doing.

HTH

KTJ_2

Thanks for the prompt replies,

Does anyone have a handy link to a website that gives you a list of things you need to sort out during the house buying/selling process?

MortgageMamma

what do you mean sort of a step by step giude to house buying ? The first thing is to work out what you can borrow and how you would like to borrow it, secondly, locate a property and egt your offer accepted, I can email you some help on that if you PM me your email address, the third part now is to apply for your mortgage and instruct a conveyancer (most good brokers have one in particular they will refer to you), once your mortgage is underway your broker will then investigate and recommend relevant insurance products. The rest is down to the conveyancer to get you through to completion but your broker will co-ordinate this as well. Basically your broker will look after your interests by recommending, advising on and arranging mortgage and insurance products and by pushing the lender/solicitor for a quick completion (thats when we get paid, you see)

Hope this helps a little.