Thicko question #4

[Fluffycloudland77]

We have a mortgage agreement in principle.

What does that mean? Or put another way what can go wrong now to stop us getting the house?

It's a new build and we are not in a chain.

It isn't at all.

What it means is that 'for the right property' the bank are happy to loan you the amount stated in the approval. I.e. the 'in principle' essentially means 'up to xx amount if we think the associated risk is appropriate'. It allows them to make sure people aren't buying beyond their ability to repay (e.g. say a complete do-er upper that would require several hundred thousand over the house purchase price and where the buyers haven't evidenced available cash for same.)

If you've found the house you want, then you need to let the mortgage people know the details so they can review and provide you with an actual mortgage agreement. I would imagine, if you're looking at a new build, this should be fairly straightforward. The bank will let you know on any additional activity (usually a valuation survey) required for them to agree final loan amount.

Thank you,I haven't done this before as you can tell

Do you have enough deposit for a new build? When I bought (5 years ago) the mortgage company wanted minimum 25% deposit on a new build

It is also subject to references etc. But it is confirmation of the amount you can get if all things are satisfactory.

I'm not suggesting they will, but this agreement in principle can be withdrawn any time the lender feels like it. Also, they havent agrred what mortgage product you can have ie interest rate, deposit, term.

If you've found the property you want, you need to get the formal mortgage offer on that property.