AIP/Mortgage Application - Wisdom Needed

[PurplePansy05]

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!

We are going through the mortgage process at the moment and our broker said we should move to full application the same day as the AIP was issued as he said they were removing products every hour and there was a chance it would no longer be available if we delayed for too long.

Luckily it was and 5 weeks later we are now at the valuation stage... fingers crossed for an offer next week.

Oh and we're getting a 75% LTV mortgage after being advised the 85% were being discouraged and there were not many to pick from. We have the added complication of both being self employed though.

You can't really blame them for being cautious about 95/90% mortgages when there's Brexit on the horizon and a global pandemic on a level not really seen before influencing the markets.

Big issue with mortgage approvals right now are the house valuations. Banks are not accepting some of the high prices at which buyer and seller have struck a deal. So they come up with their own valuations(upto 20% less as reported in The Times today). That means buyers have to pull out unless seller can cut the price significantly.

I work for hsbc although not in mortgages anymore. I would only submit details with figures as they are now as you’ll be asked to submit supporting documents in a short timeframe and the application is cancelled if you don’t do it within the timeframe (is whilst waiting for new wage slips)
Only 85% is available at the moment. Some lenders are doing 90% though

@Lightupgin Thanks. I've used online brokers and no 90% deals came up. I'm now at a very confusing stage just before submitting my application where HSBC is asking whether we want to pay the booking fee now (which would secure the rate for 6 months) or later. It's £999 (booking fee, not product fee) and I personally think with Christmas coming up, there's no hope in hell we'll complete in 6 months. So whilst paying it upfront would give us a guarantee, I just don't think it would be long enough and the rates will likely change anyway?? Has anyone experienced this before? What to do now?

We'd lose this money if the transaction doesn't proceed for whatever reason, too.

Considering going with a different lender altogether as a result.

@DblEspresso I heard that. Just keeping fingers crossed that both our agreed prices are sensible, I'd like to think they are looking at both properties and the neighbourhood prices. We're in Wales and the stamp duty/LTT rules are different here. We haven't observed a major increase in asking prices and buyers paying in excess of the asking price, at least not in respect of properties that are more valuable. For us, LTT saving is pretty minor, if it applies at all as it's due to last only till the end of March 2021.

No! Add it to the mortgage and then overpay the mortgage to pay it off when the time comes. If your mortgage application fails, if you pay the arrangement fee upfront you'll just lose the money.

@Joetribbianiz I know, but what if they increase interest rates in the next few months?

I used a broker and went from application to offer in less than 2 weeks, but no physical valuation was needed and 55% LTV

I've heard HSBC are tougher than some with mortgage approvals, I went barclays

If you were going to repay the extra on the mortgage, could you not just take out a loan/credit card after completion and pay that back instead?

My broker advised me to add it to the mortgage to guard against the mortgage offer falling through. Many are at the moment. It's not refundable in the event they do not offer you a mortgage.

@StartingGrid What are you referring to re repaying the extra on a mortgage, sorry? The booking fee?

If so, I can pay it upfront or it can be added to the mortgage and we could repay it straight after the mortgage is granted, I don't need a loan for that. It's just that as Joey says, if the application falls through, we'd lose that money if paid upfront. On the other hand, paying upfront secures the current rate for 6 months so might be handy in case they increase rates.

It's a minefield right now and still so much to get sorted! Part of me is questioning whether to even move now, every stage is hard work and many added worries

Why haven't you got a broker? Hire one, it really is that simple unless you are enjoying all this panic?

@Ukgift2016 Because up until now, I was always able to deal with property and mortgage issues myself through research and we've ended up with two very good deals. I therefore didn't see the reason to spend £400+ on a broker. I've asked questions on here in relation to a couple of practical points in hope people who are in the process of moving now experienced something similar because most of these have been affected by covid. If it's necessary to get a broker, I will get one, if you RTFT, you would have noticed I've used two online brokers already. You could post your response on 99% of MN threads, an award for helpfulness goes to you.

Not all brokers charge. Ours is phenomenal andshe doesn't charge. They get about £1k per completed mortgage from the bank.

90% mortgages essentially don't exist at the moment. An AIP is basically not worth the paper it's written on, it's basically just guidance on what you might be able to borrow.

Mine didn't charge me anything either, shop around. They have close relationships with banks tho, so a better option than doing it yourself currently

If a broker isn't charging you it's because they are getting paid by the bank. So they're not giving fully independent advice, as they will only be using banks that pay them. There's nothing wrong with that as long as they are very clear about it. Which they should be.

My thoughts are that you are placing too much emphasis on your aip. You need to concentrate on getting an offer so that the rate and ltv is locked in.