Mortgage approval question

OliQueen

Hi I got mortgage approval in January. I changed job in April and went back to the bank to apply again. Lots of pay slips and forms but finally I received confirmation that I would get approval in principal when I produced an letter to say my probation period was over. This week I produced the letter and I'm picking up my confirmation letter from the bank tomorrow. Just in time as I'm heading to an auction in the next week to bid on a house.

Due to an injury I haven't earned as much as I should have in my new job (I'm paid hourly). Basically my payslips don't match my salary cert that my mortgage approval is based on. My weekly wage will increase again but not until I finish some training. I haven't discussed this with the bank yet. I am now afraid if I bid on the auction and win I will pay my 10% deposit and then my mortgage could fall through and I loose the 10%. Is this possible? Has anyone had similar experience? Will the bank base my final mortgage approval on the payslips I have already submitted or do they require more once I have signed the contract?

Thanks in advance

Angel2016

You have submitted all your relevant paperwork and now will get you letter of approval from the bank they have seen all the documents they need to see and are happy to proceed with giving you a mortgage so I can't see an issue have they requested that you send in new payslips now?

SarahMollie

Approval in principle does not guarantee that the bank will let you draw down the money - its just what it says it is, "in principle". They can ask for more paperwork at any time, especially if the process is slow, they may ask you to show refreshed pay slips every 2 months or so (I know mine did.)

Until you actually draw down the money, they can revoke the offer on numerous grounds.

In the standard way of buying a house, its typical that the contracts are signed subject to the mortgage going ahead, but it does cover you if for whatever reason the Bank decide not to lend to you at the last minute.

Since you have an actual real reason why they might choose to do this, I suggest you enquirer about the rules regarding return of deposit in the event of your mortgage falling through with the auctioneers to ensure you're not putting yourself in a risky position.

seamus

http://www.allsopireland.ie/Support/Questions/17

In order to bid at an auction, you will need a formal offer letter and not just approval in principle.

You should also mention to the bank that you're intending to purchase at auction; as the link above says the sale needs to close around four weeks after the auction date, so the bank needs to be aware of the draw-down date.

Angel2016

I misread the OP I thought the person had full approval not just in principle in that case until you get full approval I would not go bidding at any auctions.

SarahMollie

OP, its likely based on Seamus's post that you'll have to talk to your bank to get a letter approving you to bid at auction. At that point, they may or may not ask for a more recent pay slip. If they do, then you could be in difficulty, but theres no way of knowing if they will or not.

Full Approval (ie. approval letter) for a standard house transaction only comes once you have gone sale agreed and is based on a specific property.

I presume there is some sort of auction equivalent for this.

OliQueen

Hi All

Thanks for the replies. Firstly an update - the house was sold prior to auction much to our disappointment so never went to auction.

Apologies I did not make clear I have approval in principal only. Since the original post I have visited the bank and mentioned the difference in wages. They do not seem to see it as an issue as long as I can explain. I will however be waiting until I get it in writing in a formal loan offer - this comes when I have selected a specific house and the bank values it themselves. Hopefully this will happen in the next few weeks with another property we have bid on.

SarahMollie - I still do not know what the 'auction equivalent' is and the bank were not very clear or helpful with what I needed for the auction. They were saying to just go ahead with the approval in principal letter which I doubt we would of based on the risks.