You will be asked to prove you have finance in place.

When buying a property, one of the most important things an estate agent will require is proof that you can actually afford to purchase the property. Usually this evidence is required early in the process and it can be via any legitimate source (ie it DOES NOT have to come from the agents internal mortgage advisers). In most cases the initial confirmation will be in the form of a decision in principle (DIP) from a mortgage lender which is where all your details have been input on to the lenders systems, a credit search completed and, subject to normal underwriting, the lender (based on the information provided thus far) has agreed to lend you the money to assist with the purchase.

The next step, once you have had your offer accepted, is to fully apply for the mortgage. This will include the lender underwriting your mortgage application, reviewing payslips/accounts, bank statements, ID and other documentation as required. The lender will also move to instruct the valuation. This is where a surveyor will go out to the subject property and confirm it is suitable security for mortgage purposes , fundamentally acting as the lenders eyes.

Once the lender is happy with the underwrite and the valuation, a mortgage offer is issued and a solicitor appointed to deal with the legal process through to completion.

In the main the process is pretty straight forward, but it can be daunting . You should be prepared for any lender to request as much information on you as possible . This enables them to make an informed decision whether or not to lend you such a large amount of money. The lender may also calculate that you can afford the mortgage over the next five years, as they anticipate rates may rise!

Finally, make sure you ask questions and are comfortable you understand everything you are signing. As you would expect there is quite a lot of paperwork involved in the mortgage process and it can be quite a read! However, this is the biggest debt you are likely to take on. Some rates will have early redemption penalties to change or switch products, so you need to get it right first time. Don't be shy to ask and if in doubt, seek independent advice.

Properties selling over the asking price!?

09/10/09 - Confidence in the market continues with the Abbey, Alliance & Leicester and Northern Rock reducing the interest rates on some fixed rate and tracker mortgages. Some of the tracker rates are sub 3% and well worth a look if you believe rates will not increased rapidly over the next couple of years. Other fixed rates, sub 4%, will suit those who require the comfort of knowing that their monthly mortgage costs are fixed for the period of the product. Whatever your requirement, it’s worth reviewing your circumstances and seeing what’s available in the market.

Lenders seem to be the focus of my articles more recently and in more of a positive stance! As we move in to the final quarter of 2009, and having had lengthy talks with many lenders over the last few weeks, I believe we will see more aggressive products during this period as lenders aim to finish the year on a high and with volume business. Watch this space!

As people remain content to stay on Lenders low standard variable rates, having finished fixed, discounted or tracker rates, it comes as no surprise that recent reports are suggesting mortgages for purchases are outstripping remortgage applications by 9-1! This shows that despite the current market climates, people are still moving properties and first time buyers, as I’ve mentioned before, are getting on to the property ladder.

In fact, more recently I’ve been informed of properties in the local surroundings not only having many more viewings than expected, but selling for way over the asking price! Superb news for sellers. However, although demand for properties is high, supply is still somewhat less and as a result, more people are bidding for the same property.

This is also confirmed by the recent Halifax house price index for September. The report suggests that the increased demand and lack of supply of properties had pushed up house prices by 1.6% for the month. The third consecutive monthly increase and fifth this year.

Things that gripe..

As we commence our fourth week in the Carfax hub of Horsham, my eyes have been opened to a number of interesting issues. Some which really require comment and others which perhaps I should just let pass me by! That said, and this might perhaps go against my better judgement normally, I want to take the rather risqué route and speak my mind on one particular issue which is of concern to me. One which, in the current climate, is unfortunate and can be detrimental to the house buying public.
I accept that it is a tough market out there and that everyone needs to firstly attract business and then convert what they can. If this is conducted professionally you can retain a customer for life. However, if it is done aggressively you can just as easily lose face and this can be very bad for business! We have lots of long term friends in the house sales sector and find that, in our view, the majority of these do work hard to provide a superb service. But, it appears that one or two may sometimes go a little bit over the top. It is both understandable, and sensible, that when a purchaser puts forward an offer for a property, the selling agent will require evidence that they can afford the transaction and obtain a mortgage. Quite right too! However, when the purchaser is then told that their offer will not be put forward to the vendor unless they place their mortgage through the selling agents own advisers, then this is surely not good or fair practice, in any sense!
Whinge over, and on to more positive matters. Properties appear to be selling and the general level of confidence is increasing in the market almost daily. The Conservatives will dismantle the Financial Services Authority (FSA) if they get into power next year. Not sure if that is a good or bad thing (just in case anyone from the FSA reads this column!). Have a good weekend!

Mortgage Rationing?

So, it’s official! The UK is in a recession for the first time since 1991, although the reality is that most of us have known the downturn has been gathering pace since early 2008. However, that didn’t stop a Government owned bank, Northern Rock, paying staff a reported £9m in bonuses last week! Enough said!
Following the recent £50bn government rescue plan attracting less than welcoming consequences in the stock market, shares fell. RBS required further investment from HMG (who now own circa 70%) and shares in Lloyds Banking Group (the new name for HBOS and Lloyds TSB) also plummeted.
A week for bad news continued with the FSA reporting that possession orders agreed by the courts were up 92% in the last quarter of 2008 and those who were up to 3 months behind on their mortgage payments increased by 24%, compared to the same periods in 2007.
Those who have been in the mortgage industry for some time are starting to compare the current situation to the 80s when customers had to ‘queue’ to be approved for a mortgage and even then you would only get a mortgage if you had a superb relationship with your bank/building society manager along with savings accounts already with them! This was sometimes known as rationing and some pundits are questioning if that is where we are heading in 2009? The signs would appear to be pointing us that way. If you had a 5% deposit in Feb 2008, there were some 1,100 mortgage products available to you. Today, there are less than 5, with numerous conditions attached! A 10% deposit attracted 1,200 products early 2008 yet today there are less than 20! Conversely however, if you have a 30% to 40% deposit available then the product offerings are fantastic!
The stark reality is that, if you can, there’s probably no better time to purchase a property with house prices and interest rates as low as they are. But be advised, in order to avoid having to ‘queue’ to obtain a mortgage, it might be sensible to talk to a professional advisor who can review the whole market for you and seek out a product best suited to your specific needs and requirements, be it a new purchase, re-mortgage or for investment purposes.