FTB - offer accepted, no mortgage in principle in place, what next?

chewmylegoff

So me and OH are first time buyers and we have been looking for somewhere to buy for a while and on Thursday we had an offer accepted. The sellers have not found anywhere to buy yet - their EA said they would be in touch when they do.

I didn't bother getting an agreement in principle before viewing - we have a 50% deposit, only need to borrow about 2.5x joint income and have no previous credit 'issues' so I wasn't particularly concerned about our ability to get a mortgage. I did check our credit profiles to make sure there were no issues and then had an initial meeting with my bank, HSBC but it was just a massive waste of an hour whilst the employee struggled with the figures I provided her and eventually managed to come up with the same information that the online lending calculator produces and told us we could borrow the amount that we needed...probably.

Now that we have had an offer accepted, should I now go and get an agreement in principle? Will this actually make any difference to anything or should I just get all of our paperwork together and wait for the sellers to confirm they have found somewhere to buy.

presumably if we make a mortgage application now we'll have to pay the fees and then are at risk of losing that money if the seller can't find anywhere?

p.s. I did explain our situation when we put our offer in and they were happy to accept on that basis.

gordonbennet

I would start to get your ducks in a row as soon as possible. A mortgage company should allow you to transfer their offer to another property if this one falls through for any reason.

Without it, you risk another buyer coming along who is ready to go. When I've sold properties in the past, as well as looking at the offer being made, I've also taken into account the 'quality' of the buyers and how ready they are.

Cash buyers are always the most attractive.
Someone who has all the finance agreed is a close second.

People who haven't lined up all their finance, but don't have the burden of somewhere to sell (like yourselves), are interesting and I'd humour them for a while, but I'd keep my options open and look out for someone else as they don't yet seem very committed.

People who have yet to sell their property before they can buy mine come way down the list.

Why not go to a broker to help you find a mortgage? They usually charge the lender for their service rather than you (although you still have to pay application charges to the lender) and they can sometimes get you better than the advertised rates. Plus they do most of the groundwork and form filling for you!

ConfusedofYorkshire

I don't thinking agree with the above. If I knew the seller was very motivated and that they were likely to find something quick I might, but if not you could end up with your mortgage offer expiring and having to pay again.

A mortgage offer normally last 6 months. You can complete in 6-8 weeks, that's normally the minimum. So you would need them to find something in 4 months max and that would ideally chain free, but even if they did, you could then have to rely on your transaction going through smoothly.

Basically I'd be wary of spending any money until the chain is complete. But I would get a solicitor in place and know which mortgage I was planning to apply for. You could even fill the application form in online and submit it once things are more complete.

pinkteapot

We didn't apply for our mortgage or instruct our solicitor until the chain was complete.

We waited until our seller had found somewhere, and then had to wait for their seller to find, and then for that person's seller to find! Fortunately the person after that then agreed to go into rented. You've only got a complete chain when you've got a FTB or cash buyer at the bottom, and someone who's not buying at the top. THEN everyone can start doing everything.

It could take days or it could take months. Your seller might be motivated but the people in the house they choose might not be.

Decide which mortgage product you will be applying for, and decide which solicitor you'll use (get quotes and pick one, but tell them you're not formally instructing them until the chain is complete). If you're going to order your own independent survey (separate to the one the bank do), get quotes from surveyors and pick one.

Make it clear to the EA that you've got all that sorted, but you won't initiate anything (and spend money) until the chain is complete. Chase regularly and ask what the progress is on the chain. The EA will know you're serious from this.

For us, it was just over a month from our offer being accepted to the chain being complete. Within 24 hours we had then applied for our mortgage, booked our Homebuyers Report and instructed our solicitor. Our chain exchanged contracts one month later (from the point of the chain being complete). We then had a long gap between exchange and completion, but normally this is a couple of weeks.

Thrugelmir

presumably if we make a mortgage application now we'll have to pay the fees and then are at risk of losing that money if the seller can't find anywhere?

Unless you light the fuse. Then you'll be going nowhere. As the seller won't be in a procedable position themselves. By obtaining a mortgage you are showing your commitment.