How to choose who to get an AIP with?

lis1320

Complete newbie here - I have been reading about the process of getting a mortgage and buying a property.
How do I decide who to get an AIP with? Obviously I know I should get a mortgage with the smallest interest rates but since AIP is just an AIP and not the actual mortgage agreement, I'm a bit confused.

Every mortgage calculator I have used gives me a different amount they would lend (which makes sense since the questions they ask are slightly different).
Let's say I find a flat to buy for £240k and different calculators say I could borrow enough to buy a property worth £230k-260k (including deposit). Do I just apply for an AIP with  the lender that has the best rates and best offers? Is it as simple as that and I'm over-complicating the issue?

jim1999

It's pretty irrelevant.  The benefit of an AIP is that you give yourself some comfort that you can actually afford what you think you can, and give some comfort to the estate agents and sellers that you're the real deal.

You can get it from a broker or your bank - it really doesn't matter.  You have to start from scratch when you pick a mortgage anyway, so it makes no difference who the AIP is with.

[Deleted User]

If you're wanting an AIP purely to keep the estate agents happy, then anyone that's got reasonable rates and gives you a soft search - e.g. Nationwide, Halifax/Lloyds.

If you're going to be tight on affordability (then as different lenders will give different amounts, as you've said), it's probably worth actually engaging a broker and doing the whole review/fact find 'properly' - to ensure they place an AIP somewhere that will be likely to give you a mortgage in the end and that it's reasonable to get what you want. No point viewing the house if it isn't.

As very basic examples - If you earn £50k, have no debts and no dependants, and want a mortgage for £100k, then I'd personally just stick it through at Nationwide regardless of their current offers, rates or whether you're going to use them or not (when the time comes) - as, really, you should easily get approved anywhere.

If you earn £20k and want £80k+, then I'd do it properly (ideally via a broker) to make sure you aren't wasting your and the agents time.

Of course the point of the agents seeing an AIP is to stop timewasters, but I really don't agree with that part of the house buying process - especially where clients unwittingly end up with either a hard search on their file, or are (essentially) wasting a brokers time if they won't subsequently use them for a full application. 

lis1320

jim1999 said:

You can get it from a broker or your bank - it really doesn't matter.  You have to start from scratch when you pick a mortgage anyway, so it makes no difference who the AIP is with.

If that's the case then is it possible to get an AIP with a bank but then end up getting a mortgage with a different bank/lender?

Somerset_La_La_La said:

As very basic examples - If you earn £50k, have no debts and no dependants, and want a mortgage for £100k, then I'd personally just stick it through at Nationwide regardless of their current offers, rates or whether you're going to use them or not (when the time comes) - as, really, you should easily get approved anywhere.

If you earn £20k and want £80k+, then I'd do it properly (ideally via a broker) to make sure you aren't wasting your and the agents time.

Really useful info, thank you. Between me and my partner we earn £53k, have no debts, no dependants, and a £25k deposit. As I said in my original post, calculators say we could borrow between £205k - £235k. I don't want to view and fall in love with £260k properties if that's not actually what we can borrow, so I don't quite know what to aim for. I thought an AIP would help with that, but as you say, the idea of hard searches does not sound good. Can we approach estate agents without an AIP and be taken seriously? If yes, how do I know what price to work with? It would be pointless to look at the properties at the top end of what mortgage calculators say we could get when in reality lenders will lend thousands less.

D.L

lis1320 said:

If that's the case then is it possible to get an AIP with a bank but then end up getting a mortgage with a different bank/lender? 

Yes. AIP doesn't really mean anything other than giving you an idea of how much you are likely to be able to borrow and keeping estate agents happy that you're a serious buyer. I did it with Halifax as I happened to have my H2B ISA with them. Took maybe 15 mins online. When you go for an actual mortgage you have to go through a full application process with whoever you choose.

lis1320

D.L said:

Yes. AIP doesn't really mean anything other than giving you an idea of how much you are likely to be able to borrow and keeping estate agents happy that you're a serious buyer. I did it with Halifax as I happened to have my H2B ISA with them. Took maybe 15 mins online. When you go for an actual mortgage you have to go through a full application process with whoever you choose.

In your experience, were the AIP and actual mortgage offer similar? I'm worried about getting an AIP for an amount, offering that on a property and the actual amount the lender offers being lower (not even taking valuations into consideration here).

D.L

lis1320 said:

In your experience, were the AIP and actual mortgage offer similar? I'm worried about getting an AIP for an amount, offering that on a property and the actual amount the lender offers being lower (not even taking valuations into consideration here).

Borrowed less than the AIP said so it's hard to say. Ask a broker who can give you a more accurate estimate after you give them some details, you can just choose one of the online ones.

[Deleted User]

If you're looking at the top end (which I suppose many people are, that's life!), then I agree you probably need a broker to go through it with you. When I was working in Underwriting I saw lots of people declaring things wrong (some expenses monthly instead of annual for example, or being optimistic with 'life' costs (travel, childcare etc.)).

All that type of thing will unravel at full application.

Going through a broker should give you more confidence in the AIP result being correct. Of course it can still change, but I think the broker is a safety-net if you're borrowing at the top of your range