Stupid question!

Prosecco22

I am pretty sure of the answer but wanted to ask anyway.

When a mortgage company offer to lend say £189,000 for example offer in principle, does that mean that's the max property value or say property value 220,000 with but 15% paid deposit

silvercar

Welcome to the MSE forum!

An AIP will give you the maximum amount they will lend. You then have to factor in other considerations, like the maximum loan to value. So as you say any deposit would need to be added to that to reach the property value.

Be aware that an AIP is only the 'in principle' decision, final decisions will be based on the property value (as assessed by a valuer not what you agreed to pay) and credit checks/ salary references etc

goodwithsaving

It is a bit, but I'll answer it anyway........

If they say they are going to lend £189,000, then the loan is going to be for £189,000.

The deposit would then add to the £189,000 to get the TOTAL house price of £220,000.

There are plenty of threads about sums etc on here.

Also, an offer in principle isn't attributed to a particular house and you will only know what they are actually willing to lend on that property when it comes to a proper application and valuation.

Prosecco22

Thanks that makes sense and is pretty much what i expected.
Had a DIP that stated would lend in principle upto 210,000. Seen a property and made an offer at 220,000 and i have 34,000 deposit which i assumed fell within the proposed figures but was not 100% sure. The whole experience is very new to us

Prosecco22

Thank you for the replies

goodwithsaving

Good luck with it all. This forum is a very useful place to swot upon the processes (it helped me with my first buy, and those since)

amnblog

A 220,000 price means minimum 33,000 deposit so you could borrow 187,000 or 186,000 as you wish.

If the property is valued at less than 220,000 the maths work on that lower figure. So 210,000 value means maximum lending of 178,500.