Mortgage approval a must for would-be first time buyers…but keep it a secret!

First time buyers must ensure they have up to date mortgage approval before they bid on a property. This is especially important for those who may have been granted so-called Approval in Principle but which may have expired and is no longer valid.

First time buyers that may have been granted an AIP by a bank some 6 or 9 months ago may not be aware this has expired and may no longer be valid” said Mr. Frank Conway of the Irish Financial Review.

With the price of property continuing to fall and more reasonably priced properties entering the market through public auctions, deposits placed on property by would-be first time buyers can be put at risk if they are unable to secure finance to complete their purchase. The same applies for private sales.

Attending public auctions can result in some good value being achieved by prospective first time buyers. However, they need to ensure they have not just their own deposit saved but also that they can secure financing from a mortgage lender if this is the route they go down to purchase” said Mr. Conway.

While mortgage lenders may extend expired AIP’s, they may do so for amounts far less than originally, which could result in a significant shortfall.

In one recent case, a couple that had been granted mortgage approval in principle at the end of 2011 for €250,000 found they were now being approved for far less due to recent birth in the family. In this case, the new mortgage amount was for far less than €190,000” said Mr. Conway

It is important that would-be first time buyers get an up-to-date confirmation on their approval in principle from their lender prior to placing a deposit on the property or bidding at an auction.

First time buyers are also advised to keep the mortgage amount they have been approved for secret.

5 Reasons to Get Approval in Principle

  • It confirms precisely what a prospective first time buyer can afford.
  • Helps identify homes within their price range.
  • Prevents loss of deposit if they are unable to secure a mortgage
  • Ensures they can attend property auctions in comfort.
  • Makes buyers more attractive to sellers as mortgage uncertainty removes question mark over whether or not they can afford the property.

 “Having mortgage approval is extremely important but so too is keeping that amount secret.  Preventing the amount one has been approved for from becoming public knowledge is important if one hopes to secure the best price” said Mr. Conway.


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