Buying a house with a cash incentive

eddddy

HouseHunter26 said:

My advisor has said this isn't possible. If I want to spend more, even if I make up the difference with cash and the mortgage borrowing remains the same, I must re-apply, which will void my current offer/rate.

Are you sure there hasn't been a misunderstanding?

So as a random example, you're saying you have a mortgage agreement in principle, which says something like:

• Maximum you can borrow (based on affordability): £240k
• Max LTV for the product you've selected: 80%
• So you can buy a £300k property, with a £60k deposit.

And your broker is saying that, to keep this offer, you must pay exactly £300k for a property - not a penny more or less?  That seems unlikely.

Are you sure that the broker isn't thinking that you want to move to a different product - for example, a 75% max LTV product, which might be cheaper? (Or move up to a 85% max LTV product.)

HouseHunter26

GDB2222 said:

HouseHunter26 said:

My advisor has said this isn't possible. If I want to spend more, even if I make up the difference with cash and the mortgage borrowing remains the same, I must re-apply, which will void my current offer/rate.

I think your preferred solution, ie paying some of the seller's costs, is uncharted territory. So, you won't get the advice you want. 

If you are adding in significantly more cash into the purchase, your deposit will go up, and your interest rate ought to improve. (All other things being equal.) I do wonder why losing the current offer is so dreadful?

The deposit would increase in line with the house price, but the borrowing would stay the same. The difference in rate for the current offer vs a new offer is significant (to me at least) and I don't want to pay more.

HouseHunter26

silvercar said:

You only get a formal mortgage offer when you have agreed a price on a particular property. Until then you only have a 'mortgage in principle'. You can't have made a full application without it being tied to a property. So I'm finding the broker claiming that you can't change the offer difficult to understand.

I could've been clearer in my post - my mortgage is a formal offer on a particular property. I want to change property and it's going to be more expensive. This is why I would need to re-apply. I hope that clarifies my question better.

sheramber

You now want to offer on a different property to that which you mortgage is already agreed?

user1977

HouseHunter26 said:

silvercar said:

You only get a formal mortgage offer when you have agreed a price on a particular property. Until then you only have a 'mortgage in principle'. You can't have made a full application without it being tied to a property. So I'm finding the broker claiming that you can't change the offer difficult to understand.

I could've been clearer in my post - my mortgage is a formal offer on a particular property. I want to change property and it's going to be more expensive. This is why I would need to re-apply. I hope that clarifies my question better.

Then you'll need a new offer anyway.

But even if you didn't, no, you can't pretend the extra payment isn't really part of the price you're paying.

HouseHunter26

eddddy said:

HouseHunter26 said:

My advisor has said this isn't possible. If I want to spend more, even if I make up the difference with cash and the mortgage borrowing remains the same, I must re-apply, which will void my current offer/rate.

Are you sure there hasn't been a misunderstanding?

So as a random example, you're saying you have a mortgage agreement in principle, which says something like:

• Maximum you can borrow (based on affordability): £240k
• Max LTV for the product you've selected: 80%
• So you can buy a £300k property, with a £60k deposit.

And your broker is saying that, to keep this offer, you must pay exactly £300k for a property - not a penny more or less?  That seems unlikely.

Are you sure that the broker isn't thinking that you want to move to a different product - for example, a 75% max LTV product, which might be cheaper? (Or move up to a 85% max LTV product.)

To clarify, I have a mortgage offer on a specific property and I want to change to a more expensive property. I can spend less, but if I want to spend more, I need to get a higher mortgage, which means a new deal/rate. The current rate is definitely more favorable than the current market rates.

I'm working on the basis that just offering additional savings to purchase the house is not possible, without creating issues with either the lender, estate agents, solicitors, or all 3. If this is not true, I'll just make the appropriate offer and disclose the details to the solicitor. Of course, this all depends on the seller.

Martico

HouseHunter26 said:

silvercar said:

You only get a formal mortgage offer when you have agreed a price on a particular property. Until then you only have a 'mortgage in principle'. You can't have made a full application without it being tied to a property. So I'm finding the broker claiming that you can't change the offer difficult to understand.

I could've been clearer in my post - my mortgage is a formal offer on a particular property. I want to change property and it's going to be more expensive. This is why I would need to re-apply. I hope that clarifies my question better.

So reapply. If you do so with the same mortgage amount but a higher deposit, you'll possibly get a better rate.

HouseHunter26

sheramber said:

You now want to offer on a different property to that which you mortgage is already agreed?

Yes, exactly that. The different property is going to be more expensive and I don't want to change the mortgage, if possible.

HouseHunter26

user1977 said:

HouseHunter26 said:

silvercar said:

You only get a formal mortgage offer when you have agreed a price on a particular property. Until then you only have a 'mortgage in principle'. You can't have made a full application without it being tied to a property. So I'm finding the broker claiming that you can't change the offer difficult to understand.

I could've been clearer in my post - my mortgage is a formal offer on a particular property. I want to change property and it's going to be more expensive. This is why I would need to re-apply. I hope that clarifies my question better.

Then you'll need a new offer anyway.

But even if you didn't, no, you can't pretend the extra payment isn't really part of the price you're paying.

Thank you - I'm not looking to pretend, but my question might imply I am. What would I achieve by pretending? For my own learning, I'm trying to understand the why.

eddddy

HouseHunter26 said:

Yes, exactly that. The different property is going to be more expensive and I don't want to change the mortgage, if possible.

Again, this doesn't sound right - and there would be no logic to it.

You seem to be saying -

• 1) You applied for a mortgage on a property and you got a mortgage offer.

• 2) You now want to apply for a mortgage on a different property

• 3) Your broker is saying that if the new property is exactly the same price as the old property, and you pay exactly the same deposit - you can keep the same rate as your previous offer

• 4) But if the price of the new property is higher, and you cover the difference with a larger deposit (but borrow the same amount as before) - you cannot keep the same rate as your previous offer

I would double-check both points 3 and 4 with your mortgage broker. (In my experience, if you apply for a new property, you lose the old rate. But maybe your lender has a special concession.)