When to apply for mortgage in principle?

eldaniel

Could anyone advise me please when to apply for mortgage certificate? We are thinking about putting our property for sale in the next few days. One mortgage adviser told us we should get mortgage certificate now so we know we can afford what we want to buy. Another adviser told us that we should only do it once we have the buyer as it is only valid for 3 months and it would impact our credit score in case we have to apply for another one after 3 months.
Who is right please?
Many thanks

ACG

I would say once you have made an offer on a new place and it has been accepted.

Who you get a Mortgage in principle with today, may not be who you apply to tomorrow as rates can change.

You can tell how much you can lend by going on the lenders affordability calculators. You can work out what the cost will be by putting the rate, the term and the loan amount on a Mortgage calculator. No need for a Mortgage in principle just for that.

eldaniel

Many thanks for your reply. I think the only reason why one of them suggested doing it now it is because our P60 is decent but if it is going to be based on last 3 payslips it is going to be rubbish as we earn much less in winter months. So he basically said to get it now to know for sure what we can afford before going house hunting.
Does that change the perspective in any way?
Thanks

eldaniel

Also would that really affect my credit rating if I apply for a mortgage certificate twice in 6 months?

ACG

The answe rremains the same. If you intend to use the figures on the P60 then you firstly need to find a lender or lenders who will do it. The P60 isnt going to change so the answer should remain the same, but a lender can change their affordability calculations so I still see no reason why you would get a DIP before you need to.

2 mortgage certificates (DIPs) in a short space of time could affect your score. I see no point personally, it MAY have an impact so in my opinion its not worth doing it.

The broker should be looking at your credit report and doing the research properly. It just seems like a lazy way of doing things by putting it in a computer and seeing what it comes back with now.

rochey1098

It depends on the lender, Nationwide do a hard credit check which will show up on your file whereas someone like Halifax only do a soft check.

Some estate agents like to see a DIP to show that you've looked into it, not all though. I personally got my DIP through Halifax before I went house-shopping then did my full application through Nationwide. Didn't seem to affect anything because they issued a formal mortgage offer very quickly.

csgohan4

Careful showing your DIP to EA, they will know what you can afford and push to offer that to the max

Nick_C

csgohan4 wrote: »

Careful showing your DIP to EA, they will know what you can afford and push to offer that to the max

I got my DIP from Santander, and for the amount the mortgage advisor simply wrote "as agreed" for this very reason!

If you have a DIP, any offers you make will be more attractive. You also need an offer on your own property.

csgohan4

Nick_C wrote: »

I got my DIP from Santander, and for the amount the mortgage advisor simply wrote "as agreed" for this very reason!

If you have a DIP, any offers you make will be more attractive. You also need an offer on your own property.

If you have a broker, you can simply ask the EA to confirm affordability with them.


I didn't get an AIP until offer confirmed. It's a conflict of interest to allow the EA what you can afford to the max. That's the very reason they want to see them so another 'buyer' can outbid you.


What's the point of wasting a credit search on a product you might not get. Might as well make it count for the first time on a full mortgage App

Rich2808

Plenty of mortgage providers have affordability calculators which allow you to test what they might lend.

Nationwide has a good one - they are relatively strict and it gives you an idea.

http://www.nationwide.co.uk/products/mortgages/our-mortgages/mortgage-calculators/mortgage-affordability-calculator

One issue with P60s is that they don't necessarily show the gross income if you have pension contributions deducted at source by your employer. If you do make pension contributions it might be better to use payslips - different lenders treat pension contributions differently. HSBC group are strict on these - as if you would rather make yourself homeless than stop your pension contributions!

Nick_C

csgohan4 wrote: »

If you have a broker, you can simply ask the EA to confirm affordability with them.

My Santander Mortgage Advisor offered this service.

What's the point of wasting a credit search on a product you might not get. Might as well make it count for the first time on a full mortgage App

Didn't have any problem with multiple credit searches. We ended up getting two DIPs and three formal mortgage offers in the space of less than a year.

We wanted to be quite sure that we would get an offer before looking at properties. I needed a mortgage to age 75, and my OH doesn't have a permanent job, but has been working for different employers on short term contracts for the last 8 years.