Pre-Approval For Mortgages

[rex]

We've been renting for 2.5 yrs now. Only seen two houses come along in that time that would have prompted us to buy, but it never quite came together for one reason or another. One thing perplexes me. Everyone talks about needing to prove nowadays that you can afford to buy the house, because mortgages are so hard to come by.

However, application fees for mortgages have also increased significantly. And over the course of the last two years, different lenders have been more desirable than others from time to time in terms of the attractiveness of their mortgage products.

So I have never applied for a mortgage approval in principle during that time - because I've never found the right house, and I have no idea which lender will have the best products at the time at which I want to buy, and if I keep applying to lenders for mortgage approval in principle, I am assuming this could blacken my credit record because I will have had numerous credit searches carried out against my name by different lenders, as they undergo their checks to give me a mortgage approval in principle.

I have no idea nowadays whether one has to pay any application fee to obtain the approval in principle, or whether that only applies when you apply for the specific financial product (eg 5 yr fixed rate at x per cent.).

But still I keep seeing people talking about need to have mortgage approvals in place otherwise sellers won't take their houses off the market.

What are people doing about this out there? Getting approvals in principle, and hope that they find a house before that "in principle" approval expires, or ignoring the whole "in principle approval" thing?

PS - I do know what I can afford, based on our "most likely over 90% deposit", and a back of fag packet calculation by my own high street bank as to what they would extend to us if we applied (a ridiculously high amount based on 6 times joint income, on an "affordability" calculation basis, based on current day's interest rates). But that is different from providing formal "in principle" approval proof. And the last house I tried to buy, I got into a 6 cash bidder war over the property, with the winning bidder completing within 21 days.

Edited August 19, 2010 by rex

[Pent Up]

You can get an approval in principle for free, they last for 3 months so unless you get turned down for a few to begin with, the worst you would have is one search every 3 months. I don't think this would effect your credit rating.

Out of interest, why have you decided to buy now?

[rex]

Thanks. We haven't "decided" to buy now. In fact, there's nothing on the market that I want to buy right now. That's our problem. We are searching in a very, very small area where very few properties of the type we want come onto the market. I've come to the painful realisation, after the "6 cash buyer bidding war" 2 months ago, that if and when something we like comes on, we just have to go for it, no matter what is happening in the wider economy. I'm trying to prep myself to be in the best possible position in case the right house comes onto the market in autumn. If it doesn't I suspect we'll be renting for another year before another house "possibly" comes along.

I withheld from buying the "perfect" house in late 2008, because I listened to everyone's views on this website. i wish I hadn't. Yes, everyone here is right. I agree that the market is heading down in the long term. But would I rather be "right" in the long term, or living in a long term home, having moved in nearly two years ago. The latter I'm afraid. Two years on, nothing even close to it has come on.

All the doom and gloom in the press doesn't help me, because it means that the golden oldies I want to buy from, who will be downsizing, will decide to hang on another year and see what the market is like then.

But if I were a first time buyer, I would certainly hold on. I, however, have ridden up the market since 1995.

[lady_muckfish]

You can get an approval in principle for free, they last for 3 months so unless you get turned down for a few to begin with, the worst you would have is one search every 3 months. I don't think this would effect your credit rating.

Out of interest, why have you decided to buy now?

Apparently it does affect your credit rating if you do renew your mortgage approval frequently.

Ours only lasted 2 months, we haven't renewed it yet.