Should we get approval in principle before putting in a bid on a house?

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ash26

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Hi All

Just wondering is it better to get approval in principal before putting an offer in on a house?

Myself and my partner have found the ideal house it was on the market at €245,000 but has dropped in recent days to €165,000 we are hoping an offer of €150,000 would be accepted, we currently have €10,000 in savings and proof of paying rent to the same landlord for the last 6 years. We have no loans or credit cards so fingers crossed it would be an easy process.

How much more of a deposit would we need?

Thanks
 
You need a minimum of 10% for the deposit. The bank will also check to see that you have extra to cover stamp duty and legal fees, so 10k is unlikely to be enough to get approved.
 
AIB are still doing 92% mortgages so 8% would be the minimum you would need but as ryaner says you will also need extra to cover costs.
 
thanks for the replies....would it be possible to put a booking deposit on the house for a few weeks while we come up with the rest of the deposit?
 
Booking deposit has no legal standing so you may as well not be giving any offer as you can still be gazumped.
 
I would recommend getting mortgage approval first before you get your hopes up on a particular house.
 
hi all..thanks for the replies we are after securing a gift from my parents of €10,000 so we are going to start the mortgage process...fingers crossed it will all work out.
 
ash26 said:
hi all..thanks for the replies we are after securing a gift from my parents of €10,000 so we are going to start the mortgage process...fingers crossed it will all work out.
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Banks look for evidence of a good savings history. So getting a lump sump gift for your deposit may not be all that you need for getting approved.

Having the deposit is one thing. Demonstrating to the bank that you will be able to repay the mortgage is even more important. Evidence of regular savings is important.

I would advise you to go into your bank and start the approval process. Get approved before making any offers on a property.
 
PolkaDot said:
Banks look for evidence of a good savings history. So getting a lump sump gift for your deposit may not be all that you need for getting approved.

Having the deposit is one thing. Demonstrating to the bank that you will be able to repay the mortgage is even more important. Evidence of regular savings is important.

I would advise you to go into your bank and start the approval process. Get approved before making any offers on a property.
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Hi PolkaDot

We have €12,000 of our own savings with a continuous renting history of 6 years so the repayment capacity is there...so this is why i am feeling positive!
 
ash26 said:
Hi PolkaDot

We have €12,000 of our own savings with a continuous renting history of 6 years so the repayment capacity is there...so this is why i am feeling positive!
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It would be remiss of you to assume logic from a banker, most especially an underwriter. Good luck though with your application.
 
I was loan approved in principle with Ulster Bank,an e/a told me flat out that she would need full mortgage approval before she would sale agree with me.Found it a bit annoying but she explained that they have no problems with loan principle with any other lender except UB who refuse at the final fence.

She was right as it happens Ulster Bank underwriters rejected it,there seems to be a huge disconnect between Branch giving loan in principle and Underwriters approving their decision.

I would definitely not be viewing without loan in principle at a minimum,otherwise you are potentially wasting everyone's time.
 
Congrats on your approval. We are coming to the end of our (very long and drawn out process). Just bear in mind that there may be a time limit attached to your approval eg 3 months. If you go past this date you may need to re-apply in full again. Worth checking this out with the bank. We came close to our expiry and the bank came looking for more payslips when it came to actually drawing down the cheque.
 
Hi ash- did the banks ask for proof it was a gift from your parents or how did they deal with that side of things?
 
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