Large change in interest rate after initial quote

S

st1903

Guest
Hi, I'm in the process of buying a place, and was given an initial mortgage quote when getting approval in principle. Now that I'm going ahead with getting the mortgage, I've been told by the lender that instead of the variable rate of 2.6% I'll have to go for a 4 year fixed rate at 4.6, unless I reduce the sum I'm borrowing by €7,000. The reason given, being falling rental prices.

So I just wanted to get an idea if this is standard practice at the minute, or if I'm being messed about a bit.
 
Lenders sometimes quote you the best rate they have available to get you in the door and then once they have your application, they put you on the rate that you actually qualify for.

A jump of 2% seems extreme though, are you buying an investment property? Did they quote you residential rates originally? No idea why they are trying to force you on a 4.6% 4 year fixed rate, this doesn't make sense. Did they offer you other rates or just the 4 year fixed?

Unfortunately an approval in principle is exactly that, it is not binding so the terms on the actual loan offer may bear no resemblance to those promised on the AIP.

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No, I'm not buying as an investment. They did offer terms of 4, 5 and 10 years on fixed rate around the 4.6% mark. Can't remember the exact rates off the top of my head. It struck me as a bit harsh considering I'm putting up about 15% of the total value myself, and that they were willing to put me on the variable if I put up the extra 7000 myself.
 
Would you think about putting in a mortgage application with another bank? Or is there anyway you could come up with another €7,000?
 
missdaisy said:
Would you think about putting in a mortgage application with another bank? Or is there anyway you could come up with another €7,000?
Click to expand...

Agreed.

If affordability is not an issue then shop around, as you have 15% deposit then you could try AIB, BOI, PTSB or EBS.
Don't be bullied into accepting the proposed terms.
 
Unfortunately no other bank I've been to is willing to offer the same lump sum that I would need for this particular property. So I'll probably just have to grin and bear it or look at other places. As for the extra money, I'd have to take out a loan, which I'm guessing would have a knock on effect on the amount I'm being offered.
 
Sometimes when a length of time passes between the approval in principle and actual drawdown the credit policy in the institution will have changed resulting in the change of rates. For example, you would not expect the same rate quoted one year ago if only drawing down now.
 
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