New Mortgage Application

[JustSomeone]

Hi,

Having sold my house a few years ago, and taken a bit of a hit on it (to say the least), I'm now looking to own the roof over my head again. So, technically, I'm not a first time buyer, but neither am I a trader upper.

I've spoken to a few banks and it seems the approval process is a little different to what it was my last time around. In particular, they talk about the rules of thumb about salary multipliers and stuff, but there is no "approval in principal" anymore.

If I understand the process now, I need to do my own sums in terms of what I think I can afford, go find a place on that basis, get the tour, and then apply for mortgage approval, with the bank statements, salary slips and all that stuff, but also providing the property address. I then wait for them to get back to me with an approval letter, and only then can I re-engage with the seller to start trying to close on a price.

Does that sound about right?

If so, do I have anything to lose by putting in an advance application for a house typical of what I'm likely to buy in the end just to get a realistic idea up front of what the bank thinks I'm good for based on the bank and salary statements?

If I seek mortgage approval for a place I don't buy (either because of the above, or because I just couldn't agree terms with the seller), will a subsequent approval request be treated less favourably?

Thanks in advance.

 

[Carmel]

Mortgage approval

Hi there

We went looking to BOI for approval when we were starting to look for a house. As there is no mortgage approval in principle, we were advised to pick a house from myhome.ie that was in the area that we were interested in and around the same price bracket that we were expecting to pay.

We made an initial application based on that (LTV in the right bracket etc.). You have to provide all of the paperwork and they treat it like a real application, getting a mortgage offer all going well. It gives you some comfort as to what you can afford when you are looking for a house to buy.

 

[LDFerguson]

If I understand the process now, I need to do my own sums in terms of what I think I can afford, go find a place on that basis, get the tour, and then apply for mortgage approval, with the bank statements, salary slips and all that stuff, but also providing the property address. I then wait for them to get back to me with an approval letter, and only then can I re-engage with the seller to start trying to close on a price.

Does that sound about right?

Yes and no. In reality, any competent mortgage advisor should be able to give you a ball-park figure based on affordability calculations. That's just an indication but it's a starting point.

You then make a full application based on a sample house that fits the figures.

Personally I tell clients to apply for a mortgage at the top end of their budget. If they get approved for that amount and subsequently only need less, it's a formality to get the approval revised downwards. Getting an approval adjusted upwards is a bigger job as it requires the underwriter to assess the application again.

If I seek mortgage approval for a place I don't buy (either because of the above, or because I just couldn't agree terms with the seller), will a subsequent approval request be treated less favourably?

No. In the current climate, I'd imagine a huge percentage of mortgage applications don't proceed for a whole variety of reasons.

 

[JustSomeone]

we were advised to pick a house from myhome.ie that was in the area that we were interested in and around the same price bracket that we were expecting to pay.

Perfect, thanks. That's pretty much what I was expecting. Weird.

 

[JustSomeone]

In reality, any competent mortgage advisor should be able to give you a ball-park figure based on affordability calculations.

That would be an independent advisor, right, as distinct from someone from the bank? I've been too tight to engage one of them.

Personally I tell clients to apply for a mortgage at the top end of their budget. If they get approved for that amount and subsequently only need less, it's a formality to get the approval revised downwards.

Sounds good to me, thanks!

I'd imagine a huge percentage of mortgage applications don't proceed for a whole variety of reasons.

You'd imagine. I just fear some of the black arts of the credit system - like having your credit score downgraded everytime you check it. Was afraid something like that might come into play.

Thanks again!

 

[LDFerguson]

That would be an independent advisor, right, as distinct from someone from the bank? I've been too tight to engage one of them.

Some mortgage brokers don't charge fees and get paid commission by the lenders for arranging mortgages.

You'd imagine. I just fear some of the black arts of the credit system - like having your credit score downgraded everytime you check it. Was afraid something like that might come into play.

Every time a lender runs a check on your credit rating, it does appear as an enquiry on your ICB record. But that's not a downgrading of your credit score. That said, it is perhaps a reason not to make loads of applications to loads of lenders over a period of time, as that might raise questions.