When in the market for a loan, it’s tricky to know what to do first. Find a home and then apply for a mortgage or apply for a mortgage and then find a home. Each has its pitfalls, and Murphy’s Law being what it is, if you don’t have a mortgage in place when your dream home comes along you can bet someone else will - and they buy it!
On the other hand, apply now for a mortgage without a home and what happens if 6 weeks after your mortgage offer, you still have nowhere to offer on?
Mortgage lenders understand this and so, in an effort to smooth the process, nowadays lenders are prepared to take applications for home loans even if you’ve yet to find the right place. This is called applying for a home loan ‘in principle’. The lender asks all the questions of you that are necessary to establish whether you are someone they want to lend to and, if so, how much and on what terms they are prepared to offer you a loan. You will be asked about your work, salary, hours worked, time as an employee, any bonuses, monthly expenditure, savings, etc. It’s also probably that they will check your credit history either at this time or before the offer becomes unconditional.
Some mortgage lenders are less keen to lend money on older housing stock or leaseholds or multi-floor properties. It’s therefore important that where possible you have some idea of what you are looking for before you make your application.
Once the lender has evaluated all the information you provide, they may make a mortgage offer which is, at this stage, subject to status. This means that whilst the offer is there in principle, the lender will need to see confirmation of the information you have provided (such as bank statements, P60s, etc) and also a valuation of the property that supports the criteria upon which they are prepared to lend. The primary criteria here is usually LTV or Loan to Value.
Most mortgage offers made subject to status are open for up to 6 months, allowing most potential buyers time to explore the market and find a place that suits them.
To speak to a mortgage adviser contact Mortgage Required on 01628 507477.
Related articles:
Equity release is a type of mortgage that allows homeowners 55 and over to access money from their property's equity without having to leave their home. This is done by securing a loan against the house which is usually repaid by selling the property when the borrower passes away or has to move into long-term care.
Yesterday
It’s important to ask questions about the property you are interested in before taking that step to make an offer. A little probing can make all the difference between buying your dream house or something that requires a lot of work.
4 days ago
There are millions of homeowners over the age of 60 who are likely to release money from their homes to pay for their lifestyle during retirement giving those who are 'asset rich but cash poor' a way to live out their retirement the way they wish.
11 days ago
The average age of a first-time buyer in the UK is two years older than 10 years ago. This is understandable with managing the cost-of-living and challenges within the economy such as high interest rates making it difficult to get onto the property ladder.
13 days ago
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
18 days ago
If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.
21 days ago
High street lender, NatWest, have launched a new product to help first-time buyers purchase a property with assistance from a family member or friend to get them on the property ladder sooner.
22 days ago
‘Buy Now, Pay Later’ (BNPL) schemes, such as ‘Klarna’ are short-term loans that allow shoppers to make a purchase, but delay paying for it for an agreed amount of time.
Klarna is one of the most popular BNPL services with 18 million customers in the UK alone, and offers interest-free payment options which is appealing to shoppers. However, does it affect a mortgage application?