Mortgage in principal

mike4581

Hi

Hoping someone with more experience might be able to help me because I'm confused by what seems to be a mortgage in principal catch 22.

I've read on this site and others that it's recommended that you get a mortgage in principal before you start looking so that sellers can see that you are serious and can get the requisite funds to make the purchase.

But, having phoned a mortgage broker, they have told me that if I get a mortgage in principal, when I come to make the offer I might find that the mortgage doesn't actually apply to that kind of property (apparently this happens?) or that the mortgage is no longer the best value as rates change daily. If this happens I could just apply for another mortgage but surely that defeats the whole purpose and frankly I've been scared off by repeated warnings about the damage to my credit rating that these checks could be doing?

I have no idea what i'm supposed to do..

amnblog

We tend to obtain an offer in principle first only when we feel theremight be a concern on the credit score.

Generally we just suggest the client gives the estate agent our contact details.

spadoosh

A mortgage in principal is basically saying you should be able to afford a certain amount of money based on certain things. No bank will refuse you a mortgage because youve hadd a search on your credit file for a mortgage in principal. It would be recommended to look around when applying for your mortgage as things do change.

When we first applied for a mip it found a default on oh's account from fraud ergo we wasnt in a position to buy. When we resolved it and got the default removed (it took about 6 months but left it a year as it meant we could have a bigger deposit and better ltv rate) we got a mip, and then applied for a mortgage (two seperate searches) with no ill effect.

A mip gives at least some indication to the seller that you are serious about buying instead of just looking around local properties because its a hobby or something.

I cant imagine your broker suggested not getting one? Apparently they do as said above, i imagine in that case they take enough evidence to be able to suggest that a mortgage is affordable.

Between a mip and applying for the mortgage can be several months so circumstances do and will change.

Certain lenders will lend against certain requirements in a property. Some lenders dont lend for non standard construction, some do. Some dont lend for timber frame, some do. Is their a particular style of property your looking at? As an example, most lenders will lend on new builds (but might request a higher LTV, ie a bigger deposit).

Google 'how to buy a house' and you should get some fairly comprehensive articles as to what to do.

I would suggest going to your bank/mortgage broker and asking for a MIP, then look for houses, hopefully find one you like and then put an offer in and then speak to an independent mortgage broker and ask them to find a mortgage suitable for your needs.

I know it might be new to you but buying a house is certainly not new, it happens a lot day in day out. It might seem fraught with complications but its rarely that bad. Just follow the general guidelines for buying a house and you shouldn't go too far wrong. Be practical. You will be told you can either borrow some money or you cant. Do be too disappointed if youre told you cant, it simply means youre either not reliable enough or you cant afford it. Either of those are much easier to deal with than having to deal with being in a house you cant afford or your struggling to keep up payments on. The latter is a lot more disappointing than the former.

ACG

Mortgages in principle are generally not worth the paper they are printed on.

Estate agents a lot of the time say they want a MIP/DIP/AIP before accepting your offer, but I try to avoid doing them until an offer has been made for a few reasons (They do expire, the best lender today may not be the best lender tomorrow).

If an estate agent insists on one, then it leaves us very little option so I do get one.

csgohan4

A mortgage offer for x product from z bank can be very different from the actual mortgage you get in the end.

My Broker mentioned I did not need one and if the EA insist, pass them their details. I can see why due to the above reasons and another unnecessary credit search

wjr4

We never had a DIP before viewing houses. We knew roughly what we could afford by looking at affordability calculators. We knew our credit reports were fine as we check them monthly (free websites) and also just know this in general. We were never asked to provide a DIP however some of the estate agents recommended their mortgage brokers to us (to be expected) & we just said we already had one.