Mortgage advice for FTB

Dave_606

OK, a first time buyer getting near to the stage where I might want to think about looking at properties but completely unsure of the process and timescale of things.

I originally went to the TSB last December regarding if I would even qualify for a mortgage as being in my 40's thought that ship had sailed, seems far from it. Went through the decision in principle process and got accepted that far. But they would only offer me a 90% mortgage and as no bank of mum & dad that 10% is beyond what I'm happy with as currently paying rent and saving the deposit out of my income. But doing some online applications\checks seems no reason I can't get a 95% mortgage. TSB won't budge on the 10% deposit limited products or no 95% mortgages or something, so going to look elsewhere.

We have 2 first time buyer ISA's which including the government 25% bonus would put us in a position to have that 5% deposit in the next 5-9 weeks (house price dependent). So now I'm wandering at what point (assuming the new decision in principal elsewhere goes though) do I start to think about booking appointments to view properties?. As assuming the process, even if liking 1 of the first to see to feel to make an offer, takes several weeks from the point of making an accepted offer to completion, would I need the full 5% deposit before making an offer and going down the legal route or is it OK to view now knowing the full 5% deposit will be in place in 5-9 weeks?.

Thanks for any advice.

ACG

One lender saying you need a 10% deposit does not been they all will. So you may be eligible for a 95% mortgage elsewhere.

Many lenders need to see proof of deposit at application stage. If you are not going to have it for 5-9 weeks, then I think you need to hold off for at least a month if not longer until you are much closer to having everything in place.

CraigSavage

Not all lenders ask for proof of deposit, I’ve just been approved for a 10% deposit and never got asked for proof

Dave_606

Sorry, I should have been a little clearer. The 5-9 weeks is simply with the first time buyer ISA's (including the 25% government top up) with regards to the 5% deposit. Strictly speaking savings we have in the savings account would with what's currently in the ISA's cover the 5% deposit for verification purposes now. The savings account is not ever intended to actually to used for the deposit as such, but more for other costs during\after the move.

Was more wandering if at the point of having found a desired place to make and have an offer accepted what is the typical timescale and legal process etc?. As in, to view to already have a decision in principle, if accepted is that the point we go to a conveyancing firm to start the legal process and formal mortgage application?. If both sides are chain free (us certainly) is it typically a relatively short process unless issues arise or does things tend to be an extended several weeks+ until completion?.

As said, still need to get a new decision in principle before viewing and that's likely to take time searching. I was looking at trying to find a provider online (comparison site etc) as don't mind spending the time, but concerned that I could fall foul of an unsuited policy or whilst getting a decision in principle for might not get the formal application granted.

So that might leave using a broker, but don't they charge high fees for there service or is that typically free and they get commission from the provider and make extra by trying to hard sell other services at the same time?.

GoingOn30

The process of purchasing a property takes 12-14 weeks on average so there's no harm in starting to view properties in the next couple of weeks.
You don't need a decision in principle to view properties or to make an offer.

csgohan4

doing multiple DIPS causes damage to your credit history, don't do it, I didn't get a DIP until I applied for the mortgage application via broker, having a DIP means the EA knows how much you can afford and push you to offer more through ghost bidders

Dave_606

csgohan4 wrote: »

doing multiple DIPS causes damage to your credit history, don't do it, I didn't get a DIP until I applied for the mortgage application via broker, having a DIP means the EA knows how much you can afford and push you to offer more through ghost bidders

I always thought that a DIP is only a soft credit check and leaves no record?. If not does that mean DIP checks go deep enough to pretty much confirm if a DIP goes through then the full application would to?.

In any case, with a DIP I always thought could or would an EA use this to their advantage by as you say "ghost bidders"?. That's 1 thing we said we would never do, get into a bidding war over any property or price, would sooner walk away and move onto the next. The last DIP I did was for x amount but did state I could possibly borrow more, 25% more than what I tried for. Surely that's reason not to provide a DIP as an EA or seller could use it against the buyer if they realise the buyer could get more than the asking price and thus reject any offer on that basis alone?. The advantage we would have is first time buyer so no chain, so a seller would surely find that a more attractive buyer to deal with than allow the EA to play games over trying to push for more money to risk buyer walking away?.

At least with previous DIP's I've a rough idea on what my top end is affordability wise and most properties I've looked at online are well within that limit. But as work colleagues have said, don't necessarily max out the affordability limit, as better to get a cheaper property that meets our requirements than get something with a higher price just because its within the affordability checks.

So assuming we end up going down the mortgage broker route than try several banks\buliding societies, DIP's are only valid for so long, so surely wouldn't make sense to get 1 just yet if we could be waiting months to find the right place?.

ACG

Some DIPs are soft footprint, others are hard and some differ depending on whether you are applying directly or through a broker.

Make your offer, if they ask for a copy of the DIP you can explain that you will provide it if the amount offered is enough and you are reluctant to be doing credit checks until you know your offer has been agreed subject to providing a DIP.

Dave_606

ACG wrote: »

Some DIPs are soft footprint, others are hard and some differ depending on whether you are applying directly or through a broker.

Make your offer, if they ask for a copy of the DIP you can explain that you will provide it if the amount offered is enough and you are reluctant to be doing credit checks until you know your offer has been agreed subject to providing a DIP.

Thanks for that, so I just don't know what the various previous 3 DIP's were. The first 1 was with my bank, TSB early December, an online one the same month and a third, also online a few weeks back. Hopefully no damage done and nothing shown up the last time I checked my credit report so fingers crossed.

But with a broker, how do they typically work costing\fee wise?, do they tend to charge a flat fee to the applicant or is the service cost free and they make their money via commission?. And if charges are applicable are those upfront regardless of how things go or only on successful completion of a mortgage application?.

ACG

It varies massively.

Some charge, some do not.
The ones that do charge may charge at the very beginning or after completion or anywhere in the middle and the price can vary from around £250 up to £2,500.

We charge, our fees vary depending on the complexity of the case and commission received. Typically our fee for no adverse would be around £500 and would only be charged once the full mortgage offer has been received.

I used to be a fee free broker, but I found that I had to run around like a headless chicken in order to make a wage. It basically meant I was always on the back foot - I am not suggesting all fee free brokers are like that btw.

jlaw4

I'd get a broker, especially if you want a 95% mortgage, checks are tighter (the bank is risking more) and you'll KNOW your getting the best deal for you.

I went fee free the first time around, it was pretty painless but i found i had to chase it quite a bit! this time i've paid £550 but got cashback of £500 with mortgage so she's cost £50 and was so much easier, i had an offer within a week of applying and she knew who to apply to given my very odd circumstances! worth their weight in gold.