Why you should make sure your mortgage is in place before you buy
Posted 23 September 2016 by Nick Parkhouse
If you're looking to buy a home and you need a mortgage, you should make sure your finance is approved before making an offer on a property.
That's the advice of experts after new research found that more than one in three house sales fall through because of problems in getting a mortgage. Making sure your finance is ready to go could be the difference between getting the home of your dreams and the purchase falling through.
One in three property purchases falls through because of mortgage problems
New research from a leading building society has revealed that more than one in three house sales fall through because of problems in securing a mortgage. The study by the Nottingham Building Society found that 34% of people who have tried to buy or sell in the past five years saw their deal fall through because of mortgage issues.
Indeed, a mortgage problem was the most common reason for property purchases falling through. The second most common reason (32%) was a buyer changing their mind at the last minute.
Nottingham Building Society also found that buyers are more likely to have mortgage issues than sellers. According to the mutual's research, house sellers are twice as likely to see transactions fail than house buyers.
Data from HMRC showed a total of 104,200 residential property transactions were completed in July as the market recovered from a slump in April, which saw just 73,430 deals, following the introduction of new buy-to-let stamp duty rules.
Up to 1.328million house transactions were completed in the year to 5 April compared with 1.2million in the previous year.
Su Snaith, head of estate agency at The Nottingham, said: “It is worrying that the successful outcome of many housing transactions relies so heavily on people getting the right mortgage for them very early on. There is a limit to what you can do to stop people changing their minds but finance should not be an issue.”
What you can do to ensure mortgage problems don't mean you lose a property
With one in three purchases falling through because of mortgage issues, it pays to ensure that you arrange your finance well in advance of making an offer.
Keith Osborne, editor of WhatHouse?, says: "Speak to a mortgage broker in advance of buying your home. They will be able to give you advice as to how much you can borrow and what deals are available to you. They may also be able to obtain a 'decision in principle' for you. This is an indication from a lender that they are prepared to advance the amount you need, subject to you confirming the information you have provided."