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Original poster

AIP/Mortgage Application - Wisdom Needed

42 replies

PurplePansy05 · 17/10/2020 09:28

Hello all

DH and I are selling our house. We accepted an offer and made an offer on the house we want to buy which has also been accepted. We have an AIP dating back to mid-August (valid till mid-Nov) which was done on the basis of buying a more expensive property. The bank agreed to lend us 90% LTV which is more than the entire value of the house we've ended up making an offer on. We're now at the point of applying for a mortgage and I am not sure about a couple of things timing wise and about the status of the AIP. Will be grateful if someone with more experience could help (this is our first sale).

Question 1 - AIP:

Will the bank honour the current AIP which is based on 90% LTV borrowing on a far more expensive property (and we are also their existing borrowers and have accounts with them) or will they say we no longer offer 90% LTV mortgages, your AIP is irrelevant, it'll be a maximum of 85% LTV that you can have? The lender is HSBC, I read they've recently stopped offering 90% LTV mortgages due to high demand which confused me.

Question 2 - Timing of the application:

DH is due to have a pay rise starting end of this month which isn't life changing, but it's noticeable. Would you wait with applying for a mortgage until his payslip arrives at the end of this month? I know it may make a positive difference to the amount we could borrow, but we don't need to borrow more than what's already in the AIP already anyway, in fact it's a lot less. I'm conscious of the long processing times due to Covid and I wonder whether we should get the mortgage application underway asap to make sure the current AIP doesn't expire?

Sorry, it's really convoluted!

OP posts:

Original poster

PurplePansy05 · 17/10/2020 09:31

I should add, the LTV only matters to us because the house needs updating and if we could get a 90% LTV mortgage it would be very helpful as we'd have funds left from the sale to start doing it up. We are still ok to buy with an 85% LTV mortgage, but it would make life a fair bit harder with saving up for the renovation.

OP posts:

CoronaIsWatching · 17/10/2020 09:47

Well the AIP isn't the application, so they may not honour the product if that product has been withdrawn before your application is made. You will have to ring and ask them.

You can submit your application to HSBC with his higher salary figure and then send them his payslip when he receives it. They just won't offer the mortgage until they see it.

DespairingHomeowner · 17/10/2020 09:48

I’m no expert, but believe very few banks now offering 10pc LTV and AIP is not unfortunately guarantee of a loan

Suggest you recalculate based on 15% and see if you would still get the loan

The pay rise starts in 2 weeks, shows up in 6 weeks? Wouldn’t suggest you wait... if you use a broker they might be able to factor it in

Hope that helps

Original poster

PurplePansy05 · 17/10/2020 09:58

Thank you all. The pay rise technically started few months ago but it's only now being processed due to delays in his sector and will be reflected in DH's payslip for this month (Oct). We can still buy the house with 85% LTV mortgage just will make life mire difficult with the renovation as we'd have to save up for everything.

OP posts:

caughtalightsneeze · 17/10/2020 10:10

Your agreement in principle will be how much they are theoretically willing to lend you based on your income. But when it comes to he actual offer, they will also be taking the property into consideration, as that is their security in the event that you are unable to pay.

caughtalightsneeze · 17/10/2020 10:11

After you have bought the house you may be able to borrow more if you could prove that the work you are doing would increase the value of the house. So if you're building an extension to gain an extra bedroom and bathroom, rather than just making cosmetic improvements.

yankeetid2020 · 17/10/2020 10:28

If you AIP is only valid until November then you're cutting it very fine to buy a house within that time frame.

Joeytribbianiz · 17/10/2020 10:33

It may be that 90% mortgages are no longer happening. Get a broker who can advise you.

And yes on application they will use your payslips as proof of your income, not the figure you say, so wait until there is a full payslip. My income went up just before I applied for my mortgage, and my last payslip was 50% old salary and 50% new, so they used a figure that was in between the middle of these.

Original poster

PurplePansy05 · 17/10/2020 10:35

HSBC just said it can only be 85% LTV even though we're existing mortgage customers with a much higher AIP based on 90% LTV. They don't know when this is going to change, but it's a temporary measure. FFS.

No idea what to do now, whether to apply for an 85% LTV mortgage with them or look elsewhere when no one seems to be offering 90% LTV, it seems pointless.

Or keep waiting till they reintroduce their 90% LTV mortgages, but who knows when that might be.

😔

OP posts:

Bells3032 · 17/10/2020 10:43

To be honest aips only really give you an estimate of roughly what they'll offer you. It's not a guarantee anyway and they rarely honour the full amount anyway.

If they were willing to offer you significantly more than the current house value you'll probably be fine and what was the 10% deposit on your previous quote is probably 20% on your current purchase.

Lollypoppyflop · 17/10/2020 16:06

Bells - that’s worried me somewhat. I’m with Santander and we really struggled At initial application stage to get me the money needed for my purchase. I’m having it over a longer period. I know an AIP isn’t the official offer but I thought the next stage was to go through affordability checks. I’m stressing so much that I won’t be able to borrow what I need for my purchase. Are you saying it’s unlikely at underwriting stage they will offer as much as we initially worked out together? House buying is so bloody stressful!!

Sparklewater · 17/10/2020 16:11

Our HSBC mortgage just took 7 weeks to get to the underwriters. The queue might have gone down now but if you want this house my advice is just get on with it!

Xyzzzzz · 17/10/2020 16:12

Re the pay rise - some lenders will accept a letter from the employer confirming its his new salary going forward

Original poster

PurplePansy05 · 17/10/2020 16:20

I was told HSBC only offers max 85% LTV right now. We had an AIP for a £360k loan which was based on 90% LTV (so a £400k house). We're buying a £350k house which needs more work than the £400k houses in the areas we were interested in BUT even the £400k ones needed a fair amount of work regardless. It's pure luck that we can afford a 15% deposit, we'll have some money left but nowhere near enough. This has just wiped out around £20k from our renovation budget. We definitely can afford 90% LTV, we can afford 95% LTV which they've also agreed on a separate AIP on a lower value house. It's absolutely bonkers. We're both in stable jobs and if anything, our circumstances are financially better than few months ago due to DH's pay rise. We're gonna go ahead and save up like mad, but it will be so much harder. I just said to DH that no doubt this has prohibited so many people from buying full stop.

@Sparklewater - thanks. Our seller is still looking for a property and we're just about to go into lockdown, so I suspect the queue reduce and we're not extremely rushed anyway (our buyer is retiring). But we will be applying soon anyway, probably by the end of this month/early Nov.

I don't understand why people with secure jobs and a maximum credit score, in our position, are being punished tbh.

OP posts:

popcorndiva · 17/10/2020 16:28

I think the banks are worried prices are due to fall , so if they lent 90% they might not be able to sell it for 90% if they needed to recover their money.

Original poster

PurplePansy05 · 17/10/2020 16:31

I think you're right @popcorndiva. It's just such a pain though as we're buying in the area that is pretty certain, prices really only go up. It's such a pain now, I spent best part of today recalculating everything as a result.

@Lollypoppyflop Is there a particular reason you're with Santander if you don't mind me asking? I can tell there are more experienced people than me on this thread who may be better placed, but in our experience, Santander has for a while had stricter lending criteria so I am not sure how this might translate to your application now. Have you spoken to them? Do you have an AIP like we do?

OP posts:

AntiHop · 17/10/2020 16:33

It really is worth using a broker. Ours was so useful.

Lollypoppyflop · 17/10/2020 17:15

I’m tied in to Santander for another 8 years. Fixed at a really good rate. I spent nearly two hours on the phone with someone from the mortgage team and completed all the paperwork. Provided payslips. Like the op I’ve just had a pay rise. Im hoping they will take that in to consideration. I’m putting down a 15% deposit and can put down more if I need to. I’ve got a good credit rating and I’ve been with Santander 7 years. Sadly I’ve got credit card debt and that’s what’s worrying me. I earn a reasonable salary so I’m hoping I’ll be ok but so bloody stressed because Santander are strict.

SollaSollew · 17/10/2020 17:23

I can’t comment on the LTV rates but I can tell you when I recently did our mortgage application with Nationwide they were happy to base my salary on my pay rise letter so if your husband has received something official then you should be able to use that.

Good luck. I suggest you will probably only find out when you apply what they will offer you but another positive is that we were offered more than at AIP so it can work both ways.

ramblingsonthego · 17/10/2020 17:31

@PurplePansy05

No idea what to do now, whether to apply for an 85% LTV mortgage with them or look elsewhere when no one seems to be offering 90% LTV, it seems pointless.

Or keep waiting till they reintroduce their 90% LTV mortgages, but who knows when that might be.

😔

You could be waiting a hell of a long time. Are your buyers and sellers going to wait that long? We still have the possible no deal shit show of Brevity to go through. Who knows how long covid is going to cause issues for. I would grab the 85% and do what you can and then start saving for the rest of the work.

Lollypoppyflop · 17/10/2020 17:53

Sorry op didn’t mean to hijack

Callmejudith · 17/10/2020 18:37

Definitely use a broker - there are 90% mortgages out there if that's what you want.

I'd say apply sooner rather than later, we recently remortgaged to Natwest, both very stable jobs and good credit etc etc and small LTV but it took 12 weeks

Lollypoppyflop · 17/10/2020 18:54

Why did it take so long?

LooseMooseHoose · 17/10/2020 19:58

Use a whole of market broker and just go for the 85%ltv mortgage now if your affordability is ok to. Interest rates are already rising, our broker said it seems to be a few 0.1 of a % every few weeks ATM as a general rule.

Everyone is in the same boat, in fact plenty of people can't now afford to buy at all!

Original poster

PurplePansy05 · 18/10/2020 09:07

Thanks all.

@yankeetid2020 What do you mean "I'm cutting this very fine"? AIP is valid for 90 days, in that time we managed to have an offer on our house, find one for us and only just had an offer accepted a couple of days ago. I still have a month on my AIP. What am I "cutting fine", sorry?

I do not expect to actually buy within a month obviously, I am not sure what you mean?

OP posts:

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