Mortgage in Principle- Is it worth getting one?

silverchair

Myself & OH are looking at buying our own home after many years of renting. So far we have a deposit of roughly £35000 & a joint income of £60,000 (inc inner London weighting). We are looking at properties of about 190,000 in Kent.

We were thinking of getting a mortgage in principle for 2 reasons:

1) To find out exactly how much the banks will lend us

2) To be taken more seriously by Estate agents.

We were going to just go to my local branch & get the mortgage in principle before researching the actual mortgage that we want so as to save time. Then after we've got an idea of the type of property that we want & whats available to us, research what mortgage is best for us. Is this a dumb thing to do? Should we go through a broker first? We are first time buyers btw.

Also when we approach Estate Agents should we tell them our absolute limit to begin with.

Wheres the best place to look for brokers? Is there a website that has reviews. I remember seeing on here that just because the firm has an award usually just means that they have a high volume of customers.

I would really appreciate some advice

Ste.._2

Don't worry about being seen as serious by Estate Agents, that was a boom era mentality, they're just grateful someone's ringing them these days.

An agreement in principle is a good idea but not necessary, my advice would be to use a broker so that you can be directed towards the most suitable lender without first having to apply to a few and rack up a few applications on your credit file.

The broker or the lenders website will be able to give you a rough idea of how much they can lend you.

tyler80

We went and had a chat to a mortgage advisor to get an idea of how much we could borrow (which was in line with what our own thoughts were). Then when we'd found somewhere we wanted to offer on we got an agreement in principle for our max offer before we made an offer.

It was for my own peace of mind that we got the AIP however, I didn't want to make an offer without a bit more assurance that we were likely to get a mortgage for that amount. The Estate Agent was never shown a copy. As it is, our offer hasn't been accepted an our AIP lapses in a couple of months. I wouldn't get another AIP if this one expires until we've had an offer accepted.

DVardysShadow

silverchair wrote: »

... Also when we approach Estate Agents should we tell them our absolute limit to begin with.

Under no circumstances should you ever do that. The agent does not work for you, he works for the seller of the house, so he is duty bound to extract as much of your money as he possibly can. Agents will even withhold properties you could too easily afford, to try and force you to buy a more expensive property.

Also, under no circumstances have any discussions with an Agent's mortgage department for similar reasons.

DVardysShadow

An AIP is a dangerous document for a first time buyer. Because most FTB's have a bare minimum deposit, the agent can quickly assess how much the FTB is good for from the AIP. With buyers who already have equity in a property they are selling, the Agent is less able to guess how much there is to be had form seeing the AIP - they need to know the current mortgage amount and the selling price of the buyer's property to do the calculation.

Senior_Paper_Monitor

To the OP - if you wish, I will send you a document which we have just produced on this very subject (I have previously published on this forum copies of legislation on this subject with regard to estate agent practices, which we were then handing out to all FTBs in particular - the new document has a wider commentary on such practices/strategies and how to handle the issue, as well as the legislation).

It is our own company's view on this issue and as such providing it (as it is branded) might be construed as client hunting so I will only send it on receipt of a PM indicating you want me to do so (and providing an email address for me to send it to as an attachment) and I would stress that there is absolutley no need for you to take this as a sales approach or commit you in any way to responding to my employers subsequently (you will not be entered on any sales/client database etc).

Incidentally - DVardysShadow's comment is spot on !

smcqis

Im a FTB and didnt have an AIP, had no issues about not having one with EA infact it wasnt mentioned

silverchair

DVardysShadow wrote: »

Under no circumstances should you ever do that. The agent does not work for you, he works for the seller of the house, so he is duty bound to extract as much of your money as he possibly can. Agents will even withhold properties you could too easily afford, to try and force you to buy a more expensive property.

Also, under no circumstances have any discussions with an Agent's mortgage department for similar reasons.

Thank you so much for that advice DvardysShadow . Luckily we have only visited one Estate Agent. What should we say to the Estate Agents when we visit. Just below what our limit is? Eg Im looking for a property between the prices X & Z.

I am completely clueless. I just left it up to my hubby who then told them we are off on holiday in the summer & the rest of our business. So I would like to do the talking this time, but it seems we are both quite rubbish at it.

Thank you also to everyone else who has taken the time to reply

DVardysShadow

Tell them the broad outline of what you are looking for - location, size, style and give them a range of price. Say something like 'we will look at houses with an asking of between £X and £Z'. Also, use rightmove, rather than agents because you get to see the houses they are not so keen to present to you. That way you only need to contact the agent to arrange a viewing. They will of course probe for details of what you are looking for, but you can be even more vague in this circumstance.

Keep an eye on the housing forum. There are threads there on how to make an offer. I would suggest you spend some time there and understand how offering works before you get anywhere near making an offer.

Procrastinator333

silverchair wrote: »

Myself & OH are looking at buying our own home after many years of renting. So far we have a deposit of roughly £35000 & a joint income of £60,000 (inc inner London weighting). We are looking at properties of about 190,000 in Kent.

Slightly seperate point - Be sure to look at the difference in mortgage rates once you hit 20%. It will likely be well worth saving that last £3k to hit the 20% mark!