First time buyer

peanutsburd

Hi, my fianc! and I went to look at new build properties. They are due to be built in February next year, when we looked into it, the home developers let us call firstmortgages and they worked out our affordability and we passed it credit check so we were able to reserve the property we wanted with this. Now we have to do a mortgage in principle so we can get the missives sorted, and I am worried sick.

We have good credit scores, both earn over £24k and the house is £215,000, no missed payment records, fiancee had a couple late payments a few years back but his credit score is higher than mine. We will be raising 10% deposit but don’t have it right now, they’ve told us this isn’t an issue as it’s just a principle offer. Has anyone done this before? I’m so paranoid that we won’t be accepted for a mortgage in principle. Has anyone been trough this?

kingstreet

peanutsburd wrote: »

they worked out our affordability and we passed it credit check so we were able to reserve the property we wanted

Isn't this the agreement in principle? It certainly is when we do it!

sal_III

peanutsburd wrote: »

We will be raising 10% deposit but don’t have it right now, they’ve told us this isn’t an issue as it’s just a principle offer.

How are you going to raise this? make sure any lump sum deposit to your accounts in the past 3/6m at the time of application are accounted for, as the Lender and Solicitor will ask about them.

Getting AIP is easy-peasy, if you have the income required by the mortgage calculator you are almost guaranteed to get it. Getting the actual mortgage application approved is the difficult bit.

as kingstreet pointed out you might be confusing terms, usually developers won't let you place a reservation without AIP and often try to pressure you to use their mortgage advisor for quick turn around and get the AIP on the spot. Which looks like what happened to you. If that is the case I would advise you do double check the terms as usually there is a ripoff MA fee in there.

peanutsburd

Ah, this makes sense now. We had to the credit check and affordability before the reservation but now that we’ve done it we need to go in with I.d and bank statements etc, so I panicked a bit thinking we had reserved it and might not get accepted.

Deposit is covered, we have bonuses in the next few months so will have statements to prove this. And we have a gift letter to cover us if we can’t save up ourselves. I just wasn’t sure it’s likelyfor someone to get declined for a mortgage in principle. You’ve put my mind at rest!!

kingstreet

peanutsburd wrote: »

Ah, this makes sense now. We had to the credit check and affordability before the reservation but now that we’ve done it we need to go in with I.d and bank statements etc, so I panicked a bit thinking we had reserved it and might not get accepted.

Deposit is covered, we have bonuses in the next few months so will have statements to prove this. And we have a gift letter to cover us if we can’t save up ourselves. I just wasn’t sure it’s likelyfor someone to get declined for a mortgage in principle. You’ve put my mind at rest!!

That's for a full application.

peanutsburd

I am on my computer now so feel a better typed reply is easier.

So from your replies and my understanding. We spoke to First Mortgages, they gave us an AIP, and we reserved the plot.
We need to get the missives signed off but before doing this we need to get a Mortgage in Principle?
So my question is ,Mortgage in principle, what does this involve? As a first time buyer, I feel so anxious about it all and don't feel anyones really telling me the basics.

Our solicitor said they don't deal with anything until an MIP is in place, is that correct?

kingstreet

If you've been affordability and credit checked, you have an agreement in principle.

You are now being asked for the documentation to support the full application.

peanutsburd

Thank you so much Kingstreet, I haven't slept well because I feel so overwhelmed with it all. That makes alot more sense to me.

Thanks,

peanutsburd

Sorry to bother you again. I've been told from a friend that im likely to be declined because we're putting down 10% for a new build. Is that right? First mortgages said it wouldn't be an issue but thought I'd ask another opinion as my friend has me worried

sal_III

peanutsburd wrote: »

I am on my computer now so feel a better typed reply is easier.

So from your replies and my understanding. We spoke to First Mortgages, they gave us an AIP, and we reserved the plot.
We need to get the missives signed off but before doing this we need to get a Mortgage in Principle?
So my question is ,Mortgage in principle, what does this involve? As a first time buyer, I feel so anxious about it all and don't feel anyones really telling me the basics.

Our solicitor said they don't deal with anything until an MIP is in place, is that correct?

Mortgage in principle (MIP) and agreement in principle (AIP) and decision in principle (DIP) are 3 terms for the same thing. The lender basically states that based on the quick facts provided for the AIP/MIP/DIP (mostly affordability check) they will lend you a specific amount, subject to approval of the full application, which requires more details.

AIP/MIP/DIP is in no way a guarantee for mortgage approval, there a number of factors that might lead to rejection of the actual application, for instance the Lender valuation of the property you are looking to buy might be lower than the purchase price.

sal_III

peanutsburd wrote: »

Sorry to bother you again. I've been told from a friend that im likely to be declined because we're putting down 10% for a new build. Is that right? First mortgages said it wouldn't be an issue but thought I'd ask another opinion as my friend has me worried

10% is not an immediate concern (i'm days away from exchange on a new build with 5% deposit + HTB) as long as it was disclosed when you did the AIP, you can check it and see the LTV in the AIP which should be 90%