How having your mortgage agreed at the outset can help people like First-Time Buyers in York negotiate on an asking price.
A Mortgage Agreement in Principle is essentially a document to prove you have a mortgage in place. It is something that we, as a Mortgage Broker in York obtain for all clients who approach us and almost all Lenders offer them. It proves that you are creditworthy because for the Agreement certificate to be issued you must pass the Lender’s credit score.
A Mortgage Agreement in Principle is NOT a guarantee that you will definitely get a mortgage as your full application will require further background checks (such as evidence of income) and a satisfactory valuation of the property itself. However it’s a good idea to get one done at the earliest opportunity for the following reasons:
When you are ready to make an offer on a new home most Estate Agents will undertake due diligence and ask you to produce evidence that you have funds available to complete the purchase. This will take the form of bank statements and also an Agreement in Principle certificate that can be provide for you by a Mortgage Advisor in York. Once you have provided them with all this documentation the Estate Agent will then normally stop marketing the property and put a “Sold” or “Sale Agreed” board up a the property.
If you already have a Mortgage agreed before you make an offer you are making yourself appear as an attractive proposition as this proves you are not making an offer on a “whim”, you’ve thought about how you’re going to fund the purchase and done something about it. This might persuade a seller to accept an offer you put forward on their property underneath the asking price.
When it comes to buying a house clients can soemtimes get ahead of themselves, that is to say they go full steam ahead and make an offer on a property without first checking that they are actually in a financial position to proceed. This can lead to disastrous drawbacks in further down the line if the mortgage application fails because by that time they have really got their heart set on their new family home. This disappointment can be avoided by contacting a Mortgage Advisor in York at an early stage because sometimes there are things that are causing a mortgage to decline that can be overcome given a little time.
For example, there may be a small issue on your credit report, perhaps a disputed mobile phone bill which can be easily rectified with a phone call, or you may have been under the impression that you were on the Voter’s roll and you’re not – once again that can be sorted out given a few weeks.
Or maybe you can’t get a mortgage at all… But if that’s the case it’s better that you know now rather than mess people about. If this is your situation then our Mortgage Advisors in York will be able to tell you what you need to do to improve your credit-worthiness for the future.
So now you know you’ve got a good credit rating because you’ve never been turned down for credit, you’re registered on the Voter’s roll and you’ve always made your credit card payments on time – so you may think that nothing could go wrong from here.
Well, you could approach 10 different Lenders and get 10 different maximum mortgage amounts – they all calculate affordability in their own unique ways. If you’re self-employed it can be hit and miss: some Lenders take your net profit, others your salary and divided, and some use your latest year, others an average over 3 years.
Knowing your borrowing limits is important as then you know for sure what your price range is. At our Mortgage Broker in York, we’ll be able to advise you of the maximum mortgage available to you and, even more importantly, together we’ll work out how much you can afford to pay back each month.