Broker advise to get the offer accepted before mortgage approval

coolguycp1

I spoke to L&C mortgage advisor for arranging mortgage on a property.

He said to me to get my offer accepted by the seller and then come back to him. Only then will he proceed with arranging the mortgage from the lender.

I find it weird since in Scotland where I live, if I make an offer for a property and it gets accepted, I am legally bound to purchase that property. If my mortgage application does not then get approved through L&C, I am in deep trouble.

Can seniors advise if what the broker said is the general and accepted practice? If so, how can I be assured that I will not face any issues if the mortgage application is not accepted?

dunstonh

Can seniors advise if what the broker said is the general and accepted practice?

A broker can generally tell if a mortgage is likely to be accepted or not. A local broker may well get a decision in principle to give you piece of mind. However, the national firms want you to find the property first as they want to turn you around like a factory line and don't want the "time wasting" of people who havent found a property yet.

Yorkie1

dunstonh wrote: »

A broker can generally tell if a mortgage is likely to be accepted or not. A local broker may well get a decision in principle to give you piece of mind. However, the national firms want you to find the property first as they want to turn you around like a factory line and don't want the "time wasting" of people who havent found a property yet.

Would it be the same practice in Scotland, where the OP is?

coolguycp1

I echo the comments from Yorkie1. Here in Scotland, laws are quite different from England. So, if my offer is accepted by the seller, I am bound by Scottish laws to honour my committment and to purchase the property. There are no exit options without paying penalties to the seller.

Taking the above into account, I wonder if L&C (or other similar national brokers) still would like to get the offer accepted for a property before AIP !

I have also spoken to a local independent broker but she has quoted a higher rate of interest for mortgage from a lender for the property. Thus my preference to go with L&C.

I will appreciate if members can post their experiences and guide me through the process.

dunstonh

I have also spoken to a local independent broker but she has quoted a higher rate of interest for mortgage from a lender for the property. Thus my preference to go with L&C.

An independent should be able to beat L&C as L&C are whole of market and only consider commission deals. If you are employing an adviser on independent basis, they can include non commission deals as well as the commission deals.

So, unless the commission deal from L&C was unique to them, you wouldnt expect an independent to come in worse.

coolguycp1

Thanks dunstonh,

Can people on this forum provide names of a few good IFA's in Aberdeen as the one I had spoken to quoted rates higher than L&C?

dunstonh

You must make sure that you employ the mortgage adviser on independent basis. Not whole of market. An Independent has to offer fee basis but most of the public don't understand that fee basis can be cheaper so go with whole of market instead. The FSA terminology of the options hasnt helped as many people dont realise there is a difference between independent and whole of market.

You also have to be careful of the independents that price their independent option uncompetitively on purpose. If you take a typical fee, then large mortgages are nearly always cheaper on independent basis. medium size mortgages are typically in a band which could see them cheaper or more expensive but probably not much in it as far as set up cost goes but could be cheaper monthly. e.g. if independent fee is £500 and a commission mortgage is best then a typical £150k mortgage would pay around £450 commission. That nearly covers the fee. However, if non-commission mortgage is best, you pay the £450 fee but if the deal over 5 years saves you £20pm (over the commission deal), then that equates to £1200 saved over the term (£1200 minus £500 = £700 total saving by going independent rather than whole of market).

coolguycp1

@dunstonh

Really good insight....thanks for this. Can you provide a few names for independent brokers? Is Alexander Hall one of them as they usually ask for a fee.

hcb42

coolguycp1 wrote: »

I echo the comments from Yorkie1. Here in Scotland, laws are quite different from England. So, if my offer is accepted by the seller, I am bound by Scottish laws to honour my committment and to purchase the property. There are no exit options without paying penalties to the seller.

Taking the above into account, I wonder if L&C (or other similar national brokers) still would like to get the offer accepted for a property before AIP !

I have also spoken to a local independent broker but she has quoted a higher rate of interest for mortgage from a lender for the property. Thus my preference to go with L&C.

I will appreciate if members can post their experiences and guide me through the process.

where was the advisor based? Perhaps he meant get a kind of verbal nod that the offer would be acceptable in theory. This is possible. I have done it myself more than once

dunstonh

https://www.unbiased.co.uk is the database for IFAs. Whilst an IFA is not a mortgage adviser, some will also do the mortgage adviser role but increasingly they will have dedicated mortgage advisers working in their firm. For a firm to use the term "independent" they MUST offer independent status on the mortgage advice, if they give mortgage advice. So, if you type in your postcode at the unbiased site and filter it to show mortgage advice then you should have a local list of firms that should offer you independent mortgage basis.

coolguycp1

hcb42 wrote: »

where was the advisor based? Perhaps he meant get a kind of verbal nod that the offer would be acceptable in theory. This is possible. I have done it myself more than once

The advisor was based in Aberdeen itself. She just gave ballpark figures but we have not yet proceeded to an application stage.