Getting an Agreement in Principle beginners question

CakeTime

I've been considering buying a shared ownership property for a year or so now but have always been saving for a deposit.

Suddenly, a flat has come up which is in my budget, in my ideal location and looks ridiculously nice by the pictures. It's only £50k for a 25% share and my salary is £26k. It's a lot cheaper than I had expected in this area so I hadn't anticipated such a cheap buy catching my eye...

I'm not saying I'm going to make an offer but I do have a viewing on Thursday and I read that I should get an Agreement in Principle to show estate agents that I'm not messing around. My question is:

Do I just get an agreement in principle with any odd provider to show that I will theoretically be ok? Or should I be shopping around even for the best provider before I've even seen the property?

It seems confusing to waste time doing agreements in principles if I am going to look at many properties of different price ranges... Depending on the price as well I imagine some may offer better deals so I can't commit to one provider at the moment!

Do I just want one which will cover the max I can go to and then shop around the providers at a later date if I make a deal?

Thanks so much! :beer:

tom2205

If you go there and immediately like it and don't have a decision in principle then it could be upsetting if someone views it straight after who offers and does have one. Usually estate agents have a bit of leeway for allowing you to send one across but in my experience it does give you a bit more buying power as you can demonstrate how serious you are and ready to go. If you look at what is best for you initially and get one with a lender you would proceed with on a full application basis it doesn't waste any time. Multiple decisions in principle could have a negative effect on your credit rating depending on who they are done with.

CakeTime

Thanks! Is it worth getting a decision in principle for the maximum I can get then? Five times my salary would make it approximately 125k which is so much more than I need but will prevent my credit rating taking hits if more come up in the near future.

nicholbb

I'd see a broker if it's your first time.
I don't think it's common to get 5x salary anymore, it seems to be 4.5 although Halifax does 4.75. Go on bank sites and look at their calculators.
The amount you borrow and your deposit impacts on your interest rate, 100k+ is cheaper than less, a 25% deposit is cheaper than a 24% one.

If you go to see a bank advisor, take notes and ask questions they will be happy to help and give you an insight into the process.

tom2205

If you've got a top end budget in mind for what you want to purchase then an agreement in principle for that will suffice. If you don't need to go passed 4.5x your income (5x your income can be done but you need at least a 25% deposit and been in your job for at least 6 months) then there is no need. Halifax does 4.75, doesn't leave a mark on your credit file but rates at the moment aren't amazing from them so you'd be better off seeing a broker, they will (should) discuss your credit file with you and what is best for you to ascertain the best lender and then a decision in principle can be done with them. One thing to take into account with shared ownership is the rental payment for the part you don't own as that can have an impact on the affordability.