First time buyer mortgage - can I make a house offer before having the full deposit?

weston800

Hi all,

The story: My partner and I will soon be ready to buy our first house. We currently have quite a lot of debt (£29K) but our credit history and credit score are both good. Inheritance will be coming to my partner in around 2 months time so we will be paying £24K of our debt off before we get a mortgage. We already have £5K saved in our Help to Buy ISAs and will be using £10K of the inheritance towards the deposit. We’re looking at 10% deposit on £150K house.

We have a Mortgage In Principle agreement with Halifax, this says they’ll lend us up to £180K providing we put down a 20% deposit and providing we have £0 debt at the time of applying for the full mortgage (we won’t be going with Halifax as we can’t afford 20% deposit but I got a MIP purely to allow us to view properties)

My question: Based on the above, when are we able to view properties and make an offer? There is a house online that we’re desperate to view but we daren’t in case we fall in love and can’t make an offer. My partner says we should wait until we have his £10K inheritance in our bank (+ our £5K savings in the H2B ISAs before viewing properties which I half agree with but I also don’t want to lose out!)

If we view a house and want to make an offer, at what point do we need to evidence that we have a 10% deposit? Like I said, we have £5K to evidence now but also £29K debt whereas in 2 months time we’ll have £15K to evidence and only £5K debt. Can we view a house and make an offer with our current MIP agreement and then just leave it to progress until we're practically debt free and have the full deposit?

Any advice is much appreciated.

Thanks,
Emma

Jkbc90

We had to submit a bank statement showing the deposit in the account along with all of the other paperwork needed for applying for the mortgage (after we had a DIP). This was through a broker with Nationwide, I'm not sure if other places are different.

AnotherJoe

Normally I'd say wait until you are ready but who knows, maybe the house you like the look of has sellers who are not In a rush to sell so if this one looks "special" I would say make an exception and check it out.

Of course, the sellers may also not be interested in a buyer who isn't really In a position to make an offer yet, and may have the EAs act as financial gatekeeper, but who knows you might get lucky.

JamesMarcus

I'm in similar situation.

My offer for a house got accepted but I will only have the full deposit next week. That's about 4 weeks after the offer has been made.
The bank asked for the proof of deposit, all you have to do is tell them the truth.

If I were you, speak to a broker first before making the offer. Or else your credit rating will go down if the bank starts the process and the cancels because you don't have the deposit ready.

Lilla_D

As mentioned above, some EAs ask for proof of deposit before advising the seller that it's safe to take the property off the market, but you may get lucky and may not get asked for it.

You may also get lucky and the vendor can wait for you, but it's rare - most people want to sell asap.

In terms of the inheritance coming in 2 months' time, I'd be careful with that, as 1) lenders don't normally accept future inheritance payments for the deposit, because they want to see that money is in fact available and 2) it may not be 2 months due to unforeseen complications/delays.

For this reason, the above sentence from James Marcus that "The bank asked for the proof of deposit, all you have to do is tell them the truth." doesn't really help your case.

Could you get family help (as a gift) to help you with the deposit? Most banks only ask for a gift letter, although they may also ask that the person giving the gift proves that they have the money on their bank account. If later on you do get the inheritance on time, you can use that instead of the gift, that's not an issue.

Re paying off the debt - the max loan calculation will be based on you promising that you'd be paying off part of your debt to get the required mortgage amount. Many lenders require that the solicitor ensures that this in fact does happen, but some lenders just take your word for it. Still, you should ensure that you do repay the debt as declared on application, even if a lender is not forcing you on completion, as you won't want the extra financial pressure when you're just starting a new mortgage.