Mortgage agreement in principle

keelyz89

Hi,
I was approved a mortgage in principle at the beginning of April with a building society and had my offer on a house accepted, however the vendor had reserved the right to gazump, which unfortunately is what happened.
On my agreement of mortgage certificate it states that the decision of the building society lending me that amount of money is valid until July 2 2014, so if the property fell through and I found something else, this offer would still stand/be valid.

I have now found another house and had my offer accepted. When I called the building society to see what steps I now had to take, they said I would need to go through the mortgage application again, even though I have an agreement in principle, valid until July. They said this is because of the new regulations that came into play at the end of April.

I was wondering if this is right, as I feel that when I have in writing on my certificate of agreement that the building society's decision to lend me that specific amount of money is valid until July 2 2014, they should honor it.

I'm just afraid that with the new regulations and stupid expenditure and affordability questions you now have to answer that I'm not going to be able to borrow as much as I was hoping. And my offer on my house is based on this amount!

I would appreciate any comments or advice!

Thanks

ACG

Yes, MMR came into play.

But even if it didnt, an agreement in principle is worthless. You can have a million of them and still not get a mortgage.

Keekles

MMR rules have made for stricter lending policies and in some cases, reductions in affordability / max borrowing.

Given you're a first time buyer - is there any particular reason you're choosing to go direct to the Building Society and not consult a broker? Brokers will generally offer very sound advice and secure peace of mind throughout the buying process. They're also obliged to find you the best lender / product based on your personal circumstances.

As an Agreement in Principle, the lender isn't obliged to lend you the moneys stated on full application; regardless of MMR or not. Multiple factors can affect their decision following full application as opposed to AIP stage.

Best bet is to find a broker. They should find you a better lender (if there is one) and the best product. You'll save yourself time & headaches in the short run, and money in the long.

Good luck!

keelyz89

I appreciate all that, just don't know why I have to go through the whole process again, rather than picking up when I left off! It's very frustrating, but I might look into a mortgage broker. I just thought I'd do it myself to save myself some money, but I'm already starting to get the headaches dealing with them directly!

Thanks for your help