Mortgage Question

[Steve21]

Hey all,

 

Just been looking around at options etc and was wondering about mortgages. This may seem a stupid question for those of you with mortgages already, but do you guys apply before you make an offer on a house? eg. Find out if the bank will lend the amount you want to do.

 

Or after you've made an offer that's been accepted, so they bank knows exactly that is what you're spending and where it's going etc?

 

Also when it's talking in regards to monthly commitments, will that be as of now, or as if you bought the house? e.g. If you want house insurance etc does that count as a commitment even though you don't have it currently?

 

Thanks,

Steve

[Mr.Ben]

Generally it's after, as the mortgage company will want to do a survey to ensure the property is worth the amount being paid for it (and to sting you for another few hundred pounds :-)

[mac_shinobi]

First question I think you go through an estate agents or mortgage advisor etc , you show em what properties and see how much they ( banks etc ) will lend you as far as a mortgage and you go from there with ref to making an offer once you know that they will lend you Y amount

 

Not sure ref the other questions but will be in the same boat soon ie in a year or two

[Steve21]

Generally it's after, as the mortgage company will want to do a survey to ensure the property is worth the amount being paid for it (and to sting you for another few hundred pounds :-)

 

So if you made an offer that was accepted, then a bank refuses a high enough mortgage it's just tough, or find another that will? Craziness I hear! (Or as you said extra monies)

 

Thanks,

Steve

[Steve21]

First question I think you go through an estate agents or mortgage advisor etc , you show em what properties and see how much they ( banks etc ) will lend you as far as a mortgage and you go from there with ref to making an offer once you know that they will lend you Y amount

 

Not sure ref the other questions but will be in the same boat soon ie in a year or two

 

That's what I always assumed, but seems a lot of the estate agents are always asking about mortgages before even showing a property which got me thinking.

 

And as usual banks being as helpful as always won't give an easy answer without booking appointments and going through paperwork etc

 

Seems a bit of a piggy in the middle situation, both want stuff you don't have before giving you what the other wants!

 

Steve

[Andrew_C]

Talk to some mortgage lenders up front. That way you will know what sort of price region to be looking in. Or, talk to a broker. They know the market, and may well save you money, or time*, over doing all the legwork yourself.

 

 

* The broker that I'm using now, knew for instance that Scabby National were quick (and accept some documents scanned by email), and only a fraction of a % more than other, cheaper lenders who insist on snail-mail all the way.

[plexer]

Speak to your bank or whoever you think you'll be taking the mortgage with and they will be able to tell you how much they will lend you, often is x amount times your salary or yours + partners salary with x amount deposit.

 

That way you basically have a mortgage offer from your lender and you can then put an offer in.

 

Ben

[bodminman]

When looking for a house late last year I spoke to someone at London & Country and they were able to give us an idea of how much we could borrow.

 

Once we had this info we were able to look at houses within our affordable range and eventually make an offer. Once the offer was accepted I went onto a few mortgage comparison sites and picked the best one for us and spoke to London & Country again to see if they could sort out the mortgage for us. However, the deal I found on the comparison site was not only cheaper but was only available if we applied directly to the building society which in our case was the Nottingham Building Society.

 

So I rang the Nottingham BS and they gave us an agreement in principle pretty quickly and then the following day I went through the whole application on the phone with them. A few days later I sent them some documents they requested and then about two weeks later we received a letter saying that the mortgage was approved. Really easy!

[XiJ]

Defo get some advice from a good broker or at least a lender upfront (is you main bank). Otherwise how do you know how much you can borrow and therefore offer?

 

Most places will give you an 'mortgage on principal' which states that all things being equal (valuation ok, searches, survey good) they will lend you the money. The sellers/estate agents will likely want to know you have this so you're not wasting their time.

 

I know a very good IFA in South Yorkshire - he was good with is getting the right company to lend in our situation (which the time was me starting new job and wife on maternity leave).

[jcollings]

You could do with looking at mortgage deals and getting an agreement in principle.

 

Useful explanation here:

Getting a Mortgage | Mortgage in Principle

[XiJ]

In fact why not move to a lovely terrace on South Yorkshire? Did I mention my house is for sale and has excellent motorway links within 2 miles?

[elsiegee40]

I agree. Go and see the lender(s) you are interested in and get an agreement in principle... that means that they are prepared to lend to you.

 

Whether they are prepared to lend for a particular property is another question that will only be answered after you have made the offer.

[Steve21]

Thanks guys Seems best to book a few appointments and see how it goes!

 

Will have to see my main bank, few competitors and see if there's some decent brokers nearby.

 

Thanks,

Steve

[Tallwood_6]

Just been through my first house purchase and it can be a little bit intimidating if you’re going in completely bling , my advice would be to find a decent mortgage advisor would be to pay a little extra if needed and get good solicitor / conveyancer. We went with the Halifax and the mortgage advisor was brilliant and they offered us a good interest rate for the loan to value we were looking at and paid our stamp duty along with some cash back on completion. The Halifax panel conveyancing firm we used I didn’t rate much though, fixed cost which is great for budgeting but little more than a call center and very slow considering.

 

Most of the lenders have mortgage calculators online now so have a look at these and see what comes out with what you have saved before going in branch.

 

Most mortgage advisors / financal advisors will also push life insurance, income protection and home insurance, dont be bullied into the first two and be sure to shop around especially for the home insurance.

[XiJ]

It is good practice to have life assurance Though - even a decreasing term one so the mortgage gets paid off. Shouldn't cost too much

 

I think building Insurance was compulsory for us with our mortgage - at least that what the bank told us - but contents optional.

[featured_spectre]

It is compulsory for life insurance on a mortgage now, you can't get out of it, but it does decrease the longer you are into the mortgage, so that if you die/are injured critically, you will have the house paid off, but they go through your medical file with a fine toothcomb. If I have an accident that kills me/critically wounds me because I had a migraine, it is not covered due to it being a pre-existing condition. If you have a tooth removed, they will not cover you for heart disease, because gum disease leads to heart disease etc.

 

As for your mortgage itself, speak to the banks in your area (or building society, they tend to give better interest rates and can/will offer a 100% mortgage if your credit record is fantastic and the value is less than £200k). Get an agreement in principle and then go to your estate agents. From there, look at the houses you like, and see if you can speak directly with the house owners also, they may be willing to sell with some furniture, which can be a good haggling tool.

[plexer]

Have you go an official source on that?

 

It would appear some lenders may take this stance but I don't think that's true.

 

Ben

[Tallwood_6]

Life insurance wasn't compulsory at least not with any of the mortgages we looked at. Mortgage advisors might convey that impression because they earn a healthy commission on selling the policies. Buildings insurance is compulsory for most but contents isn't and each lender will have its own terms I.e maximum excess. Our lenders buildings & contents quote was about 4 times the price available elsewhere.

[mossj88]

I've not got a life insurance and got a mortgage a couple of years ago... Didn't realize it could be an issue.

 

The way I did it was went onto a comparison website, and worked out the most I could afford based on the deposit I had. Then I looked at properties around that price range, once I found one I was interested in I made the offer and got an agreement in principle from the cheapest provider (from their they sorted out surveys and I employed a solicitor).

 

The reason the estate agents might be asking is it's likely that they earn a commission is they refer you (likely to be several £££).

[featured_spectre]

When we got ours, lloyds, hsbc, barclays, natwest, halifax, nationwide, santander, and alliance and leicester all said it was compulsory. Think it is an additional £21 a month for the both of us, every year it goes down £1 a month

[bodminman]

When we were going through our mortgage application earlier this year Life Ins wasn't mentioned at all. It didn't matter anyway because we both already have it in place.

[plexer]

Our first mortgage was with Lloyds and we didn't have too they will suggest it as a good idea and it's upto them to lend on their terms but your original statement it misleading.

 

Ben

[mac_shinobi]

Minimum deposit, I know its done as a percentage so 10% or 15%??

[Michael]

Before looking at houses, it's good to know what deposit you're able to put down and talk to your bank. This should exclude Solicitor fees, Stamp Duty, Council Tax, Utility and money to live as a minimum. Looking at 'popular' housing websites online, you can then easily narrow down the selection of houses available in your price range in your area.

 

Buildings Insurance is mandatory, no ifs or buts about it! Without it you go against your Mortgage T & Cs! Contents Insurance is also recommended but not mandatory. If you do decide to get both, make sure you get them both from the same company. In the event of a problem, you're then dealing with one company and not two, who will try to play off each other to pay as little as possible!

 

Life Insurance is a requirement for some types of mortgage - especially Interest Only, as you're a much higher risk than if you're paying a Repayment Mortgage. I would still recommend it anyway, as it's a small price to pay when you consider the protection it offers your better half or your family

[featured_spectre]

Minimum deposit (IMHO) should be 20% of the house value + 5% for fees (solicitors, estate agents, stamp duty).

 

at 20% you can have the interest down around 2-3% (depending on what was available for you), and over the years this WILL save you a nice wedge of cash (which you can put towards paying it off early if they don't have the penalty for doing so)