Next Steps
Getting An Agreement In Principle
Getting an agreement in principle can be a relatively simple
task, but is one that is very worthwhile doing before you
get too attached to the idea of buying a property that is
on the market. Although you can get an agreement in principle
on the web, over the phone, or in person, this is usually
followed up by a written quotation.
A written agreement in principle is a handy document to
have. It shows any prospective seller that you mean business
and can actually get a mortgage to cover the purchase price.
On top of that, it provides a handy reference for some of
the key features of your mortgage, and what your repayments
will be for the discount period and beyond (assuming that
interest rates don't change).
Below is a slightly out of date example of a written quotation
obtained from a well-known direct lender, which should give
you a clear idea of what you might expect to receive. As
you can see, it gives you quite a few useful details. You
can get written quotations for repayment mortgages (often
call Capital & Interest Repayment) or for interest-only
mortgages. There is nothing stopping you from getting agreements
in principle for various different purchase prices, to see
how much your repayments will be and to gauge how much you
can borrow.
FLEXIBLE MORTGAGE QUOTATION
Purchase price of property: £166,000
Total mortgage requirements: £149,400
(The quotation below may form only part of your total requirements
and, if so, should be read in conjunction with any further
quotations which have been provided).
Capital and Interest Repayment Method
Mortgage Amount £149, 400
Interest Rate 4.6000 % per annum variable
APR 6.00% variable
Credit Period 25 years
Number of Instalments 300
Gross Monthly Payment £838.92
Total Amount Repayable £251,676.00 (Gross)
Additional Flexible Mortgage Conditions:
The interest rate has been reduced by 1.75% for the first
6 months from the date of completion, then for the next
30 months the interest rate will be reduced by 0.31% thereafter
the interest rate will revert to our prevailing standard
variable rate.
The interest rate for the first 3 years from the date
of completion will not be greater than 1.0% above the Bank
of England Base Rate or, if this is no longer set, such
other comparable rate that we choose ("Base Rate"). Any
variation in the Interest Rate following a change in Base
Rate will be made on the first of the month following the
Base Rate change.
Should you redeem your mortgage during the first 3 years
from the date of completion, you will be required to pay
an extra 3 months gross interest on the initial borrowing
at the prevailing standard variable rate at the date of
repayment.
NOTES:
The quotation given is valid at 6th November 2001.
The figures provided are the terms on which we would consider
providing a mortgage.
A firm offer is unable to be made until a full application
has been received and we are satisfied that our lending
criteria has been met.
This type of mortgage is only available to applicants of
properties which are owner occupied.
The property must be insured against all normal risks.
The quotation given is valid at 6th November 1999.
The figures provided are the terms on which we would consider
providing a mortgage. A firm offer is unable to be made
until a full application has been received and we are satisfied
that our lending criteria has been met.
This type of mortgage is only available to applicants of
properties which are owner occupied.
The property must be insured against all normal risks.
