Please advise re applying for mortgage approval in principle

john.west

Hi all, Hopefully somebody may be able to provide me with some reliable advise on applying for mortgage approval in principle. I have being hearing some very conflicting views and takes on this and as per usual everybody dishing out the advise is full sure their right. I'll cut a long story as short as possible.

Was looking at a house on Daft last week and sent the EA off a mail on it. The EA rang me the following day and told me that to view the house the vendors request that the viewer has mortgage approval in principle. Fair enough I thought as he said house is owner occupied still and as they were messed around by timewasters in the past and would need to vacate the house for a few hours and what not to allow for the viewing.

Made the appointment and called into my bank today. As I have a few deposit account in different banks I took all statements along but not all were up to date and did not have a P60 with me (I was told either a P60 or 3 latest payslips in initial checklist) I need to go back to the drawing board. However aside from that she told me approval in priciple is provided based on a specific property (and of course based on your savinga and repayment capacity) as oppossed to a blanket approval up to X amount. Now firstly the EA told me if I had approval in priciple and had my affairs in order to that extent I would be in a good baragining position to make an offer on the property. It doesn't make much sense to me that the bank shold even approve (or not) me in principle for this particular property when chances are the final selling price might be substancially less perhaps...Am I missing something here, is the cart going before the horse? Aside from this if I am viewing further houses do I need to go back to the bank each and every time if this mortgage approval in principle is requested due to the fact it now seems to be specific to the property? I understand the rules are changing everyday in this regard and banks are tightening up in their controls and what not but this does not seem right. Got mortgage approval in principle about 10/11 months ago in another bank a blanket approval up to x amount was given. I can understand the bank doing a valuation of the property before they give an actual mortgage but is the afore mentioned procedure necessary at this stage from the banks point of view in my scenario?

As and aside from the above questions is it possible to get approval in principle but not necessairly show my hand to the Estate Agent fully as regard to the amount the bank will allow me so as to allow me to remain in a better bargaining position as in the above scenario?

Thanks for all/ any advice.

Blackjack

Not sure how you can confirm to an EA that you have approval in principle without disclosing the amount - how are they going to know you have this without you disclosing the amount you have approval for?.

All this does is show the EA what you can borrow, and what they can take you for, IMHO.

If you can somehow prove to the EA that you have been approved in principle without telling them the amount, then great, but they've no idea what you have been approved for either, giving you a better bargaining position.

Whats to stop you saying you have it in the first place without telling them the amount?.

Senna

Why dont you go to the bank and ask them for approval in principle for an amount less than what you would offer. Say you would consider paying 200k, get approval for 130k and just tell the EA you have saving to make up the difference. At least then the EA isn't getting any indication on you max level.

Approval in principle means nothing, you can put all your details in now, but if you buy in a months time they'll ask you for all of it (and a lot more) then as well.

Fozzie Bear

Why don't you just blank it out? A big fat black marker or tip-ex is your friend!

You probably want to keep the original letter from the bank, so then photocopy it, blank out the amount of money you have been offered on the copy, photocopy this again to make sure the amount is not still readable and give this second copied letter to the EA.

They can see all the other details, your name, address, Bank name etc but not the amount of money you have to play around with.

The EA can have absolutely no complaints about that. They have proof you are approved like they asked.

john.west

Blackjack wrote: »

Not sure how you can confirm to an EA that you have approval in principle without disclosing the amount - how are they going to know you have this without you disclosing the amount you have approval for?.

All this does is show the EA what you can borrow, and what they can take you for, IMHO.

I agree Blackjack. On the face of it I either get approval to for the amount I need to buy the house in question or not. It may be a silly question on my part on the first place

Blackjack wrote: »

If you can somehow prove to the EA that you have been approved in principle without telling them the amount, then great, but they've no idea what you have been approved for either, giving you a better bargaining position.

Thar would be the ideal scenarion for me as such. Its just that banks seemingly don't be too keen to give this blanket approval these days even to assist you when viewing properties in my case for example. They seem to want details on the property in question as oppossed to approving you up to X amount. It would be ideal for me to get a written approval in principle without reference to a certain amount as, as you say it would leave me in a better bargaining position. Particularly as it seems the vendors will play ball if one has this approval and their affairs in order to that extent. Aside from that though I do have a certain figure in my head at the moment which I will not go above. I say that from the point of view of only having seen the house on paper yet though. I am mindful of the fact that it is very much a buyers market now or at least getting that way!

Blackjack wrote: »

Whats to stop you saying you have it in the first place without telling them the amount?.

The fact that the EA is requesting a letter of approval in principle from the bank is stopping so seemingly me just saying so will not suffice Blackjack

Blackjack

john.west wrote: »

I agree Blackjack. On the face of it I either get approval to for the amount I need to buy the house in question or not. It may be a silly question on my part on the first place



Thar would be the ideal scenarion for me as such. Its just that banks seemingly don't be too keen to give this blanket approval these days even to assist you when viewing properties in my case for example. They seem to want details on the property in question as oppossed to approving you up to X amount. It would be ideal for me to get a written approval in principle without reference to a certain amount as, as you say it would leave me in a better bargaining position. Particularly as it seems the vendors will play ball if one has this approval and their affairs in order to that extent. Aside from that though I do have a certain figure in my head at the moment which I will not go above. I say that from the point of view of only having seen the house on paper yet though. I am mindful of the fact that it is very much a buyers market now or at least getting that way!



The fact that the EA is requesting a letter of approval in principle from the bank is stopping so seemingly me just saying so will not suffice Blackjack

Not sure what I was thinking when I posted last night (I wasn't entirely sober...), but this is something I've done previously - get the Approval in Principle for 2 amounts. 1 being the amount beyond which you yourself will not go, and the other for an amount below the asking, say 20%.

Your Bargaining position opens...

john.west

Senna wrote: »

Why dont you go to the bank and ask them for approval in principle for an amount less than what you would offer. Say you would consider paying 200k, get approval for 130k and just tell the EA you have saving to make up the difference. At least then the EA isn't getting any indication on you max level.

Thanks Senna. Thats seems an idea but the problem is I that it seems to me as if the banks seem to want details of the property before approving you in principle these times. Im not sure if reference would be made to this particular property on the approval in principle which they would provide me with or what way they draft it. I was in Ulster bank yesterday and to be quite honest I felt the level of service was quite poor. Overall the rep I dealt with was condasceding and not very helpful to my cause really. She was even forcing an answer out of me on which firm of solicitors I'd be using which lets face it at this stage is such really a major issue. As an aside from this its not easy getting into banks to do these sort of things when you work 9 to 5 type hours like myself but Im going off in a rant and a tangent now so I'll stop!

john.west

Fozzie Bear wrote: »

Why don't you just blank it out? A big fat black marker or tip-ex is your friend!

You probably want to keep the original letter from the bank, so then photocopy it, blank out the amount of money you have been offered on the copy, photocopy this again to make sure the amount is not still readable and give this second copied letter to the EA.

They can see all the other details, your name, address, Bank name etc but not the amount of money you have to play around with.

The EA can have absolutely no complaints about that. They have proof you are approved like they asked.

That sounds like an idea Fozzie Bear and thanks. Do you reckon the EA should not be in a position where he can turn around and say such is not good enough if I do this. Would people have done such before and is it broady acceptable practice?

Fozzie Bear

john.west wrote: »

Do you reckon the EA should not be in a position where he can turn around and say such is not good enough if I do
this.

Not to be glib about it, but screw him. He has absolutely no right (legal or otherwise) to know, or ask you how exactly much money you have been approved for. He asked you for proof of your mortgage approval and thats exactly what you are giving him. If he were to find out how much your bank has approved you for then he has you over a barrel and will milk you for as much money as he can. Its akin to showing the other players your hand of cards in a poker game.

If its not good enough for him, then approach the vendors directly and try to deal with them. You know where the house is and that it is occupied. Knock on the door or drop a letter through the mail box.

john.west wrote: »

Would people have done such before and is it broadly acceptable practice?

I personally don't think its acceptable practice to expect potential buyers to show EA's how much money they have been approved for with their banks. Its utterly ridiculous in fact. Its a buyers market out there and EA's should be bending over backwards to accomodate buyers and not making them jump through stupid bloody hoops.

john.west

Thanks again Fozzie Bear. Your advice and comments are much appreciated.