Set up mortgage in advance

paulbrannan

Hello,

I'm in a position to buy a second property freeing up the equity on the 1st. My question is, should I set the mortgage up in advance of buying?
I am in the early stages of house hunting and aware that offers usually last 3-6 months, which should suffice for me.
I have been warned though that if it is set up in advance I am obviously tied to the rates of the day the deal was done whereas down the line I may be able to get better terms.
So should I have the mortgage ready to go and the advantage of being able to move very fast on a property, or leave it till nearer the time and get the best product available then?

Hope this makes sense!?

Cheers

Thrugelmir

Until you've found a property to purchase then you are not in a position to apply for a mortgage.

You can reserve a product to secure the terms.

So the cost of the upfront non-refundable fees may be a consideration in the eventuality that you don't apply within the time frame.

paulbrannan

So by reserve it would mean that the product is chosen and the terms fixed but the application is not actually processed?

Thanks

Mrs_Z

Well, as you are freeing up equity from your first house in order to buy the second for cash - I don't think there's anything to stop you to do it now, even if you have not yet found a property. However, this would obviously mean that your budget would not be very flexible, ie. if you're looking on the basis of £100k and free this from your house and then end up putting in an offer for £120k, you're obviously stuck unless you have some spare cash reserves to make up the shortfall. Usually the mortgage offers are valid for 3 months, maybe 6 in some cases.

The question whether to do it now or later - well, that's anyone's gamble isn't it? Do you belive that the future rates will be better than you get today.....?? Personally, my bet is that the rates are on the upwards trend, I mean they can't really go any lower can they???? However, how much and how soon is another matter. I think we may see one, max two quarter percent rised before year's up. On the other hand, I don't think there'll be much movement on the house prices.