Spoke to mortgage advisor,now a bit confused

DepositSaver

I phoned London and Country this evening for advice. I have read in various places online (on this website and others) that it is a good idea to get a mortgage in principle from a lender before viewing any properties as it shows you're a serious buyer.

I had expected that after my phone call L&C would go away, come up with a list of mortgage options for me, and that they would then discuss the options, give advice/recommend one, and I would choose a a lender to apply for a mortgage in principle with. I would start viewing properties, and hopefully at some point find one I like and make an offer. I would then either put in a full application to the lender I had the MIP with, or the broker would re-check the market for better deals, and I would apply for one of them.

What has actually happened is that I have been sent an email with a letter attached called a "Decision in Principle" which the broker told me to show to estate agents. It says based on the information I have given I should be able to borrow approx £117,000, and some lenders may be prepared to lend up to £160,000. Will estate agents take any notice of this? I already had an idea of how much I might be able to borrow based on the caluclators I have used on various bank websites. How is this DIP any different from me just telling agents how much I could borrow? The broker hasn't seen any proof of my earnings. Do I need a mortgage in principle from an actual lender?

I mentioned to the advisor that I had read advice about getting a mortgage in principle from a lender before viewing anything, and he said they don't do that as it is an extra credit search. He said I should find a property and contact them when I have made an offer, and they will then search the market for an appropriate mortgage. I am concerned that I would then have to decide between a number of possible mortgages in a hurry, as I wouldn't want to be the cause of delays to the purchase. He mentioned applying the same day the offer was accepted, and when I queried that, said something along the lines of "you could take a couple of days to decide". This is huge financial decision, I want to be able to take time to think about it and decide on the right mortgage for me.

Have I misunderstood how mortgage brokers work? Do they all work in this way? Will I have time to properly consider my options after an offer is accepted? Sorry for so many questions, and thank you in advance!

kingstreet

DepositSaver wrote: »

I phoned London and Country this evening for advice. I have read in various places online (on this website and others) that it is a good idea to get a mortgage in principle from a lender before viewing any properties as it shows you're a serious buyer.

L&C doesn't do that, because that's extra work and you may not go back to them.

I had expected that after my phone call L&C would go away, come up with a list of mortgage options for me, and that they would then discuss the options, give advice/recommend one, and I would choose a a lender to apply for a mortgage in principle with. I would start viewing properties, and hopefully at some point find one I like and make an offer. I would then either put in a full application to the lender I had the MIP with, or the broker would re-check the market for better deals, and I would apply for one of them.

No. That's not the way L&C works.

What has actually happened is that I have been sent an email with a letter attached called a "Decision in Principle" which the broker told me to show to estate agents.

Which is nothing but L&C's idea of how much you might be able to borrow.

It says based on the information I have given I should be able to borrow approx £117,000, and some lenders may be prepared to lend up to £160,000. Will estate agents take any notice of this?

Very little. They'll try to get you to use their advisor, regardless of the DIP you have (or not!)

I already had an idea of how much I might be able to borrow based on the caluclators I have used on various bank websites. How is this DIP any different from me just telling agents how much I could borrow? The broker hasn't seen any proof of my earnings. Do I need a mortgage in principle from an actual lender?

No different and yes, IMHO.

I mentioned to the advisor that I had read advice about getting a mortgage in principle from a lender before viewing anything, and he said they don't do that as it is an extra credit search.

Yes and work for them they don't like doing with no guarantee of getting the business.

He said I should find a property and contact them when I have made an offer, and they will then search the market for an appropriate mortgage.

Yes. Then they are only working when they have a good chance of securing the business.

I am concerned that I would then have to decide between a number of possible mortgages in a hurry, as I wouldn't want to be the cause of delays to the purchase. He mentioned applying the same day the offer was accepted, and when I queried that, said something along the lines of "you could take a couple of days to decide". This is huge financial decision, I want to be able to take time to think about it and decide on the right mortgage for me.

That's how L&C works...

Have I misunderstood how mortgage brokers work? Do they all work in this way? Will I have time to properly consider my options after an offer is accepted? Sorry for so many questions, and thank you in advance!

No. You've assumed we all work like L&C, when L&C puts less legwork in early on, than the rest of us.

We email you a copy of our Initial Disclosure Document and confirm our fee, attaching our Data Capture Form at that stage.

We source the best products at that time and provide KFIs for you to consider.

We then obtain a decision in principle from the best lender at that time, so you know what you can afford ,

When you submit an offer and the price is agreed, we re-source the case and produce new KFIs and submit an application to a new lender, if required. Often, no new credit check is required and if necessary, two credit searches make no difference to most borrowers.

DepositSaver

Thanks so much for this Kingstreet. I think I will be looking for another broker...I came off the phone thinking that this surely can't be how brokers work, as everything they'd said I could easily have found out myself on the internet. Glad to hear it's not how you all work!

kingstreet

Find a broker near you. Ask friends and relatives for a recommendation.

I'm regularly out in the evenings and weekends, earning every penny of the £249 fee we charge.

Many brokers do the same...