When to instruct advisor...

corkyefes

Good Morning,

Hope somebody can give me some advice.

I went to see a mortgage advisor last night and he told me that myself and my partner would be able to gain a maximum mortgage of £160k (bject to credit checks etc), which I find this hard to believe in all honesty as we only earn a maximum of £37k between us.

Whats your thoughts? ... He told me some lenders may lend that amount, yet some won't.

Anyway, whatever sum of mortgage we tactfully apply for, we know that we will have to save 10% deposit.

We aim to do this by the end of December this year, however is it possible to instruct the advisor to proceed with a mortgage application, in say September, even though we won't fully have the deposit yet?
Can we do this and just tell him we cannot complete until the end of December?....
Or would we need the full deposit at the time of application?

Also, when do we need the fee money (solicitor fees and survey fees)? ... Are these paid at the time of application or at the end of completion?

Hope you all can help.
Best Regards

ACG

September is probably a little too early.

Once your close to the time, say November at the earliest and you have found a property had an offer accepted then is the time to ask them to get you a Decision in Principle (DIP...also known as an AIP), once that is passed an application can go in and the solicitors can be instructed.

The solicitor i use charges her fee on completion, some solicitors charge a £25 admin fee to open up a file - they all charge differently.

Valuation fees are usually charged after the application goes in but before completion.

Also £160k is achievable, possibly even a little more - depending on the rest of your circumstances. But the less you take the easier it is to place and the more lenders (and importantly) rates it will open you upto.

corkyefes

Thanks for your speedy reply.

Could we get a DIP/AIP before we find a property, or do you need to know the property value before you apply?
For example, could we just apply to borrow £108,000 and then look for properties at £120k? (£108k mortgage + £12k Deposit).

Then once we have been given DIP/AIP, let our advisor know when we fully have the deposit to actually apply.

Would you say it was best practice to have any fees (solicitor, survey etc) saved before we apply for the DIP/AIP?

StuC75

Searches and Fees are paid when they are requested - e.g. They look for payment as those fees are incurred.. That way should the purchase breakdown they have been paid for costs incurred..

Hope you are also factoring in Stamp Duty provision - though this is paid within 28days of completion - most solicitors may look for it to be received in time for completion so that they can complete all the formalities in one go..

The first months payment is more than the usual amount - as its 1 month full payment plus the broken interest from the part month that completed - so whatever mortgage you go for, factor in an 'almost' double payment to start with (And you wont 'go wrong'...)..

ACG

You can get a DIP beforehand but most companies do a credit search (halifax and one or 2 other lenders only do a soft footprint). I dont usually do DIPs unless the estate agent says theyre needed as they do expire after around 28 days - they put a time limit on you finding a property, you can get a new one but its pointless in my opinion.

Take your credit files to a broker and they can advice you whether there be an issue or not.

corkyefes

Hi Stu,

I think it might be best then to have any fees saved before we apply for a DIP/AIP, do you think?

Stamp duty will not be applicable as we will not be purchasing a house anymore than £124,000. But thanks for pointing it out.

So we should take into consideration a double mortgage payment for the first one?... Sounds abit hefty.

StuC75

Would recommend having as much in place before you start. As Ftb it can be worrying just how quickly money for 'this and that' starts going out.. That way then you can safe up a buffer whilst the purchase is ongoing - it might also help if you then budget financially at the higher level..

Ensure have funds aside regarding surveys as well - basic mortgage ones are just for that.. Though most things it will pick up may be generic faults (and general wear and tear), it may help to identify bigger concerns..

The mortgage payment scenario can vary on when in the month you pay.. for example..

funds are transferred on the 14th. The first payment would be Interest only for 14th to the End of the month, then repayment for the full next month.. taken with the next direct debit payment - or some will take the interest payment within X number of days, then the next payment on the normal date.

Most mortgage KFI's will show such a payment based on an assumed completion date.. There only charging for the time from money transfer - so theres nothing underhand going on..

corkyefes wrote: »

Hi Stu,

I think it might be best then to have any fees saved before we apply for a DIP/AIP, do you think?

Stamp duty will not be applicable as we will not be purchasing a house anymore than £124,000. But thanks for pointing it out.

So we should take into consideration a double mortgage payment for the first one?... Sounds abit hefty.