Securing mortgage before finding property

jonny1664

Am looking for a bit of advice please.

I'm looking for a flat in london with a target price of between 250000 and 315000. I want to fix for 5 years for the security of knowing what my repayments are, I have been in touch with a mortgage advisor and also done my own research and the leeds BS 5 year fix at 4.99% with 75% LTV is the best one I can find.

I have not yet found a property to buy but am told I need to be able to act fast if I do. Therefore should I get my mortgage completely approved (ie not just in principal) before I find somewhere. If so what amount do I ask for? Presumably the most I am willing to spend (315) and then if the property is lower do they simply alter the agreement? All very confusing.

If it helps I'm employed, good credit score, on electoral role.

Thanks in advance

Money_Saving_Professional

Hi Jonny

Its always difficult knowing which way round to do things. My advice would be to get a decision in principal (which estate agents usually look for in the first instance) for the £315,000 maximum loan and then look for property. Lenders won't give you a formal offer without knowing the details of the property they're going to lend against, so you won't be able to move forward on that until you've got to this stage. If the property is then less money, you can submit a full application for the amount you want.

Hope that helps.


Teresa

jonny1664

Thanks for the advice.

The last estate agent i talked to told me that when I put in an offer they contact my solicitor that day and then arrange the mortgage survey. Surely this can't be done before I have been approved for a mortgage?

dunstonh

jonny1664 wrote: »

Thanks for the advice.

The last estate agent i talked to told me that when I put in an offer they contact my solicitor that day and then arrange the mortgage survey. Surely this can't be done before I have been approved for a mortgage?

Correct. Thats just the estate agent trying to get you to use their in-house agents. Never do that. They have the worst reputation.

The best process is to go to a local mortgage broker (not estate agent) and get a mortgage in principle. Whilst this is not guaranteed, it does work most of the time (its where people are not honest or undisclosed information turns up on application where it usually fails. i.e. forgot to mention a loan or declared a credit card as £500 when it was really £5000).

Once you find a property, you go back to the broker who will verify the deal is still best and then you start the application process. You may choose not to instruct the solicitor until after the valuation has been done (if you are running it tight on criteria) just in case it fails. It may delay it by a week or two but most house moves dont take place that quickly due to the chain.

jonny1664

Thanks for the advice, it's really helpful.

As I mentioned I went to mortgage advisor but found that the Leeds BS 5 year fix was the best deal out there so was planning to go direct to them. My advisor could find almost the same deal, and I am currently wavering to go with that one simply because I think it may be easier and more likely to progress without a problem.

herbiesjp

As stated above - get an AIP for your maximum amount.

If it is agreed, anything lower will be fine as well.

However, remember it will leave a footprint on your credit file, and by the time you find something that lender may not be offering you the best deal anymore.

As Dunstonh says, do not be forced by the estate agent to follow what they say. They will have their own agenda.

So find your own true whole of market adviser and let them find a good deal for you, as the estate agent adviser may only work from a limited panel.

What area of London are you looking at?

jonny1664

Am looking in south west london, battersea and clapham common area.

Have managed to side step all the estate agent advisors that bombard me with phone calls!

fleenio

How long does an AIP usually last for? Does this vary from lender to lender?

dunstonh

fleenio wrote: »

How long does an AIP usually last for? Does this vary from lender to lender?

About 5 minutes.

It is a snapshot of there and then. If the next day the lender changes their lending criteria, then you may no longer qualify. It is no guarantee of a mortgage down the road. As many found out during the credit crunch when criteria seemed to change daily.

fleenio

dunstonh wrote: »

About 5 minutes.

It is a snapshot of there and then. If the next day the lender changes their lending criteria, then you may no longer qualify. It is no guarantee of a mortgage down the road. As many found out during the credit crunch when criteria seemed to change daily.

Oh dear!! Say the AIP doesnt last for long and you havent found a house by the time it ends/ceases and you then get another from a lender, will this not eventually affect your credit file? (sorry if i sound a but "duh" but im new to all of this and my brain is on information overload).

herbiesjp

If you have done just the one credit search, and you have an already good credit history, it should not cause any problems if you then need another one.