how to ask for mortgage if unsure of purchase price

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elvis67

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I've seen the home i want.Theirs an offer of 150 000 on it obviously il have to top that.Maybe 152K ? Thing is how much do i ask the bank for ? If i get a loan for 152k and somebody else offers 155k im history.I'd be prepared to go as high as 160k and thats it.How do you ask for a mortgage when you do'nt know the ultimate purchase price ? You cant really put in a bid unless you know the bank will advance you the money.Catch 22 !
Hope im making myself clear.How do you get around this ? Is there some sort of agreement in princible with your bank,preliminary approval ?An agreed figure which is the maximum the bank will advance and which is the maximum you should bid ?
Any advice most welcome.Im sure their must be a simple answer,but then it's only simple when you know it !
 
Ask the bank for approval in principle for the maximum amount they are willing to lend. That way you know what your limit is. You don't have to "spend" the maximum amount they will lend - in fact I'd recommend you never do so unless you are very comfortable with your repayment ability e.g. consider what happens if interest rates double.

Some banks may offer you more depending on your circumstances. So if you want the maximum amount, shop around. A good broker may help in this situation, as they'll have a good idea of the way the various lenders currently lending calculate limits, which could save you some time -- there's no point applying to a bank that probably won't match an existing offer.

How much of the property you want to borrow will affect your limit slightly e.g. if you want to borrow 100% of a property value, they might lend you €200,000 based on your income. But if you wanted to borrow only 80% of the property value, they might lend you €220,000, as the lower percentage (loan-to-value ratio) is less risky.
 
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