Mortgages 'Agreed in Principle'

A_Nice_Englishman

Could any of our resident financial advisers or mortgage brokers clarify something for me?

I understood that before starting to look for a property you could go to a mortgage lender, give them the financial and other details they asked for and they would agree a mortgage 'in principle' (Some of them call it a 'mortgage promise' or similar.) . This is the amount they are prepared to lend you , assuming that they are happy with the price and condition of the property you eventually want to buy.

If that is the case, should a good financial adviser / mortgage broker be aware of the requirements of the various lenders, gather all the relevant information at an early stage and direct his client to a suitable lender to avoid dissapointment later on?

If a first time buyer is buying a property with no chain, how long would the sale typically take to go from an offer being accepted, through the valuation and exchange of contracts to completion? When I bought my first property in 1991 I think the valuation was done the week after my offer was accepted, we exchanged four weeks later and completed two weeks after that. I would expect that with modern technology it could be done more quickly now.

herbiesjp

It would indeed make sense to apply for an AIP with a lender that has suitable deal, from day 1

Normal timescales can be around 6 weeks - it is not so much getting the mortgage agreed and a formal mortgage offer letter isued, but the legal work that needs to take place that can take the time. An offer letter can be out within a week of submitting an application

HTH

A_Nice_Englishman

herbiesjp wrote:

It would indeed make sense to apply for an AIP with a lender that has suitable deal, from day 1

Normal timescales can be around 6 weeks - it is not so much getting the mortgage agreed and a formal mortgage offer letter isued, but the legal work that needs to take place that can take the time. An offer letter can be out within a week of submitting an application

HTH

Thanks for that herbijsp. A friend is selling his house and his buyer's mortgage application doesn't seem to have reached the survey/valuation stage six weeks after the offer was accepted. The buyer is using the estate agent's in-house financial adviser and my friend is being told this is quite normal.

herbiesjp

A survey should be done normally within a week of the application being sent in - if after 6 weeks nothing has happened I would start to wonder what was going on

HTH

MortgageMamma

I agree with Herbie, I would be advising your friend to be more assertive - this is not normal even for an inhouse EA adviser looks like there could be a problem somewhere - a good EA wont even accept and offer without evidence the buyers are good for the money

A_Nice_Englishman

My friend remembers being told the buyer had a mortgage arranged when he accepted the offer, though it was done on the phone and never confirmed in writing. He just thought that as he heard nothing to the contrary the sale was going through OK.

I suppose the moral is to always get things in writing.

MortgageMamma

Sometimes a buyer can obtain an agreement in principle, and actually apply for the mrtgage itself, but still hold off sending in the cheque for the valuation, particularly if its a paper based application

To be honest I think your friends best action would be a quiet word in the EA's ear, saying that if a valuation is not instructed within the next week the property will be remarketed - that usually speeds them up!

A_Nice_Englishman

MortgageMamma wrote:

Sometimes a buyer can obtain an agreement in principle, and actually apply for the mrtgage itself, but still hold off sending in the cheque for the valuation, particularly if its a paper based application

To be honest I think your friends best action would be a quiet word in the EA's ear, saying that if a valuation is not instructed within the next week the property will be remarketed - that usually speeds them up!

Sounds like a good idea MortgageMamma. I think I'll suggest he asks the estate agent why things have dragged on so long and 'de-instruct' him and go to another agent if he doesn't get a satisfactory reply.

MortgageMamma

Make sure he checks the terms and conditions of his contract with the estate agents before he does anything drastic like that, some will make a charge of the whole fee if an offer has been made on the property through them

It might be better to just suggest he's going to write in and complain to the MD or something

I can't wait for the day these cowboy estate agents are regulated like us brokers they won't know what hit them!

A_Nice_Englishman

Good point about the fees MortgageMamma.

Presumably the in-house financial adviser IS regulated like you mortgage brokers?

herbiesjp

A_Nice_Englishman wrote:

Good point about the fees MortgageMamma.

Presumably the in-house financial adviser IS regulated like you mortgage brokers?

Indeed they will be regulated by the FSA in some shape or form, either directly or as an appointed representative of the firm/mortgage network they work for

HTH