AIP confusing

katie4

AIP £138,250 - this is 63.34% mortgage £80k deposit (equity in our current house with £10k left for fees/moving costs etc) with the new house purchase price we’re looking to buy being £218,250

I’m just confused as to how this works. We’re looking to sell our home for £140k this is what the AIP was based on but if we sell it for less does this mean that the amount we are able to borrow we also be less?

TheSpectator

katie4 said:

AIP £138,250 - this is 63.34% mortgage £80k deposit (equity in our current house with £10k left for fees/moving costs etc) with the new house purchase price we’re looking to buy being £218,250

I’m just confused as to how this works. We’re looking to sell our home for £140k this is what the AIP was based on but if we sell it for less does this mean that the amount we are able to borrow we also be less?

Possibly but if you only asked to borrow £138,250 based on an £80k deposit then that's what the AIP will be based on. If it turns out you have less of a deposit and need to borrow your application will be re-assessed.

DE_612183

The AIP represents what a bank is willing to loan you - you add this to the deposit ( once you've put aside any costs ) and thats what you can purchase for.

If your £80k deposit is based on selling your house for £140k ( assume you have £60 left on mortgage ), then yes if you sell for £130k then your deposit is £10k less...

DE_612183

The AIP isn't based on your current home - it's based on your income and predicted expenditure.

grumpy_codger

As long as you sell for more than £80K (enough for the deposit), you are fine.
If you sell for £140K you have more cash than you need for £80K deposit. So theoretically you can go as high as £140k+£138K. LTV will be smaller and you'll probably qualify for lower interest rate.

katie4

I should add we have around £48k remaining mortgage and if we sell for £140k we’ll have £90k equity but mortgage advised £80k deposit and £10k for solicitors/moving costs etc 

DE_612183

katie4 said:

I should add we have around £48k remaining mortgage and if we sell for £140k we’ll have £90k equity but mortgage advised £80k deposit and £10k for solicitors/moving costs etc 

Yes, so thats fine - if you sell for less - you either:

1. Borrow More
2. Find more deposit
3. Offer less for the property you want
4. Get another AIP based on more accurate figures

katie4

DE_612183 said:

katie4 said:

I should add we have around £48k remaining mortgage and if we sell for £140k we’ll have £90k equity but mortgage advised £80k deposit and £10k for solicitors/moving costs etc 

Yes, so thats fine - if you sell for less - you either:

1. Borrow More
2. Find more deposit
3. Offer less for the property you want
4. Get another AIP based on more accurate figures

Thank you 

Hoenir

Obtain an AIP for more than you actually need.