Agreement in Principle

Tjrw1985

Hi All,

Is there any lender that will offer the above without placing a footprint on our file?

Basically, we are buying a new build so cannot apply for the mortgage yet as the house won't be ready until June and to move in, in August.

It is just for our records really.

Thanks

kingstreet

Yes. There are one or two lenders who carry out limited "soft" searches, but what will it tell you if you know it's unreliable/incomplete?

You can't use it to demand a mortgage if you later fail the full application search.

"Just for our records," what does that mean exactly?

The builder will be expecting you to exchange in 28 days and to complete "on notice" as soon as the property is finished. Offers last six months from the date they are issued, so you should be well within that even if you apply now.

You don't normally get to wait before applying. Have you reserved yet? What did the builder say about this plan?

Tjrw1985

Thanks Kingstreet.

I should have clarified. We are very confident we will get the mortgage, and just want to see how much.

We are buying shared ownership, and we have paid the reservation fee already.

The developer has stated that property will be ready to exchange in June and we can need to complete within 7 days from 9th August. Once they have put everything in.

kingstreet

Right. It's not a regular newbuild scenario.

Why not simply key your details into a few lenders' affordability calculators to see what output you get?

TBH if you were my client, I'd have got a proper AIP for you before you reserved. It may have expired by the time you want to apply, but there's every chance in the SO market that the best lender for you three months ago would still be the best lender for you in three months' time. One extra search isn't going to do any harm.

An AIP with a three month lifespan should be okay now, as you'll be applying in April, I guess?

Tjrw1985

We have done the affordability calculators and all seems fine there.

The reason we didn't get an AIP is because we had been speaking to our own financial advisor, but then we needed to speak to the developers mortgage broker anyway. So we held off.

If we approach our broker now, will the offer still be valid in August? In your experience.

kingstreet

If you apply for an AIP today, it should be valid for three months (check beforehand) so that leaves you upto 8 June to put in a full application and as you have to exchange in June, you need your mortgage offer in your hand for then.

Assuming you apply for a mortgage at the end of April, you should have your offer by the end of May and that would be open until the end of November and you expect to complete in August.

I can see no problem with getting an AIP now, for an application in mid to end of April, to fit your timescale.

You got more than 5% deposit, or are you stuck with the one lender?

Tjrw1985

We are being gifted the deposit and it can be up to 10% so not tied to just one lender.

So, to clarify, if we get an AIP now, that will expire on the 8th June and as long as we apply by the end of April, the terms should be the same as the AIP as long as all is correct.

kingstreet

Yes. You should be applying in April so you have the ability to exchange in June. You could wait until April and do nothing until the full application.

If you want an AIP now, it should be valid for three months and you won't need that long if you'll be putting in a full application in April.

Don't forget, an AIP doesn't reserve a product, so what's available today might not be available in six weeks. Although, as I say, the lender with the best rates on SO now will probably still be best then too.

As I said, check the lender's AIP lasts three months before you proceed. Also, ensure the lender is happy with gifted deposit on shared ownership.

Tjrw1985

Thank you.