When do you apply for a mortgage?

Grenage

Hi guys,

we've just sold and exchanged - we complete in a few days; we've just started looking at houses, although we are staying with relatives in the interim. A couple of weeks ago, I rang up Nationwide about their 10-year fixed mortgages - they said that it would be best to just to an affordability check for now, and apply when we've found somewhere - apparently the process might affect our credit score as it's a 'hard' check.

Affordability check was obviously fine, and we can borrow far more than are willing to borrow.

While we've seen a couple of houses that look interesting, do you really only apply for a mortgage at the time of offering on a house? While I have no doubt that we'd get the mortgage, I have nightmare visions of finding a great house and offering, only to be told that it won't be accepted until a mortgage has been approved.

I'd appreciate feedback from the more experienced.

Thrugelmir

Apply once you've made an offer. A lenders criteria, products etc can change overnight for many reasons. Your own personal circumstance may well change as well between application and offer.

Grenage

Great, thank you for such a quick reply; much appreciated!

David_White

Step 1) Get an Agreement/Decision in Principle
Step 2) Have an Offer accepted on a property
Step 3) Submit mortgage application

JimmyTheWig

I agree with David. You might struggle to get an offer taken seriously without an agreement in principle on a mortgage, but no need for a full application at this stage.
As long as you are honest during your agreement in principle application (e.g. not hiding any defaults that would be found on a full credit search) there shouldn't be a problem.

Grenage

David_White wrote: »

Step 1) Get an Agreement/Decision in Principle
Step 2) Have an Offer accepted on a property
Step 3) Submit mortgage application

Oh I see, so the agreement in principle is done before you find a property, and then you apply fully. Guess I'd better book an appointment for the AIP, then! I already did the affordability check, but that didn't seem very thorough; they basically just asked for income and any loans.

Nothing to hide; no loans, credit cards, secret children or drug habits.

David_White

It's wise to get the AIP beforehand as it gives an indication as to whether your application would be successful or not.

Also, from the Estate Agents point of view if they get 5 people enquire about a property 1 of which has a mortgage agreed in principle and 4 that don't who are they going to take seriously?

Grenage

Much obliged!

[Deleted User]

I rang up an estate agents to ask to view a house and was told most estate agents won't let you even view a house without a mortgage in principle.

I think you officially apply for the mortgage after your offer on a house is accepted, but need a mortgage in principle to prove what a bank will lend you to be able to view houses etc

csgohan4

David_White wrote: »

Step 1) Get an Agreement/Decision in Principle
Step 2) Have an Offer accepted on a property
Step 3) Submit mortgage application

I disagree, on step 1, the mortgage you get may not be the same product for starters and it may leave a hard credit footprint.

In addition if your with a broker, there is no need to show an estate agent the AIP as it is a conflict of interest.

As a result they will know what you can afford at the top end and mysterious buyers will be making offers to force you to bid higher.

When I bought my house not so long ago, they asked me if I had an AIP, I gave them my brokers details and to get in touch with them to prove affordability. You know what, they never contacted him.

It's a ploy to see how much they can push you. Remember the EA works for the seller not for you. Just be sure and form with the EA, mention you have a solicitor and surveyors in place and are ready to go.

ACG

Im with csgohan.

Although I think it depends on whether or not you use a broker. 9 times out of 10 I meet clients, do a factfind, check the credit reports and affordabiltiy checks and ask them to let me know when they have found a property and had an offer accepted.

If you get a DIP today from nationwide (I use them as an example as you mentioned them), you may find you offer is not accepted until Monday and by then another lender may have come in with better rates. So its a wasted DIP. Aside from that, a DIP can show how much you can get so as has been suggested on here, its like playing poker with your cards showing.

If you do not use a broker, then you may find the agent does not take your word for it (for whatever reason) and is more insitant on seeing a DIP.