When should I apply for mortgage?

Funder

We've currently out our house on the market and are looking around for a new house and mortgage.

I have a rough idea what we will get for our house, what we can afford, what size mortgage we can get etc. However slight variations to above will mean we need to get either a 75% or 80% LTV mortgage. Either is affordable

My question is, when looking at the best buy tables different mortgage providers are more competitive at the different thresholds. So, should I wait to find out exactly how much I need to borrow before I apply or apply now and err on the side of caution?

I don't feel I need to go to a broker unless that is definitely the best option in this situation and I can get good recommendations.

Thanks in advance?

benjus

You can't apply for a mortgage until you have found a property and had an offer on it accepted.

If you're talking about getting a decision in principle then it doesn't matter which you go for as there's no requirement to apply for a mortgage with the same provider. It's just a way to show estate agents that you're a potentially proceedable buyer.

Funder

Ok thanks. Yeah I think I'm just overthinking this!

If I got a decision in principle will this require a search on my credit file or is it just a soft search?

Also, I pesume I can get a decision in principle through a broker and this doesn't tie me in to a particular deal?

Malmo

Funder wrote: »

Ok thanks. Yeah I think I'm just overthinking this!

If I got a decision in principle will this require a search on my credit file or is it just a soft search?

Also, I pesume I can get a decision in principle through a broker and this doesn't tie me in to a particular deal?

The DIP involves a credit search. Whether this is a hard or soft search depends on the lender. Be very wary of the limited scope & limited usefulness of a DIP based on a soft search though, as old previous addresses aren't used for a soft search. Halifax are one such lender and a broker who recommends using Halifax just for the DIP with a view to using a different lender for the full application should be avoided in my view.

A broker will help you obtain a DIP and should ideally tell you that a search will be recorded on your credit file, and a hard search will be visible to other lenders for up to 12 months.

clarky_cat

Funder wrote: »

Ok thanks. Yeah I think I'm just overthinking this!

If I got a decision in principle will this require a search on my credit file or is it just a soft search?

Also, I pesume I can get a decision in principle through a broker and this doesn't tie me in to a particular deal?

I've had a few decisions in principles and all had a "soft" credit check that doesn't leave a footprint. Its worth checking as I believe it varies from lender to lender

Funder

Thanks for your help

Which providers only do a soft search please?

Malmo

Funder wrote: »

Thanks for your help

Which providers only do a soft search please?

Is there a particular reason why you would want a soft search? As mentioned above, a DIP based on a soft search is pretty limited and not particularly useful.

Have a read of these threads before making any decisions.

https://forums.moneysavingexpert.com/discussion/4442483

https://forums.moneysavingexpert.com/discussion/5165572

Funder

Ok. I suppose it's just so I have a record of how much if can borrow should an estate agent require it.

As I said previously I shouldn't have a problem borrowing the amount I require but didn't want to be tied to a specific mortgage provider without knowing which LTV.

Malmo

Funder wrote: »

Ok. I suppose it's just so I have a record of how much if can borrow should an estate agent require it.

That's fine but my question was why you'd want to specifically go after a soft search DIP (rather than a hard search DIP). By all means, obtain a DIP as you will likely need it for the purposes of placing an offer, but the type of search that the DIP records shouldn't be the driving factor. It's far more important that you deal with the best lender for your specific circumstances & requirements, to give you the best chance of being offered a loan.

I'd start doing the following in preparation:

(1) Obtain copies of your & your partner's statutory credit reports from all 3 Credit Reference Agencies. You need all 3 reports to obtain a full picture of your profiles. It is worth reviewing all 3 reports well ahead of time, to enable you to spot any errors and have them corrected in good time, or any adverse issues such as defaults, CCJs, missed payments, arrears etc that you may not be aware of (companies can and do make mistakes). Doing this exercise will ensure that the data that lenders use to credit check you is up-to-date, correct & complete.

See links below to each agency's statutory report.

Experian Statutory Report

Equifax Statutory Report

Callcredit Statutory Report AKA Noddle

(2) Start engaging with a decent, knowledgeable whole-of-market mortgage broker. You'll need a mortgage Agreement / Deal in Principle (AIP or DIP) in place before you start offering on properties you want to purchase. That way, vendors and their agents will take you more seriously as a buyer. Brokers aren't essential as you could go direct to a lender assuming that you have done your research, understand their lending criteria and you and your partner have spotless credit profiles, but I feel they are invaluable in guiding clients through the buying process and acting as a liaison between parties - they are not there just to get you a good deal on a mortgage. Try starting a local broker search at unbiased.co.uk.

On the home page, next to the search box, select Mortgage Adviser and enter your postcode and hit search.

When the search results are displayed, in the filters on the left hand side:
Un-tick the Only show sponsored results box.
Expand the heading More filters and under Adviser restrictions, tick the box for Mortgage Broker (Whole of Market)

This should give you a list of potential brokers to contact in your locality.

Ask about their experience and make sure you understand from the brokers you speak to what fees will be charged and at what point in the process. They can be fee-free or fee. Ideally, after contacting them, they'll email you a couple of documents;

• their Terms of Business or Initial Disclosure Document (IDD), which will outline/summarise the service they provide and their fees along with how they are regulated by the FCA etc;
• possibly a Fact Find document that you need to complete to help them understand your full circumstances & requirements.

Funder

Thanks very thorough and helpful.

My original concern was that at this stage without selling my house or buying a new one, I don't know exactly how much LTV mortgage I require. It's going to be close between 75 and 80 LTV.

However, the most competitive providers at 75 and 80% LTV are different so I don't want to apply for one only to then need the other.

So I thought a soft search just for the purposes of the estate agent would be useful in the first place.

Malmo

I would actually wait until you have accepted an offer on your own property before you start searching and offer on a property yourself. This will make you a proceedable buyer. You can obtain a DIP when you have accepted an offer and start your search. This is what I am doing as my property will be marketed shortly.