What is a mortgage in principle
A mortgage in principle is an official estimate provided by a lender indicating how much they are will to offer you based on the details you have provided including income and debts.
A mortgage in principle or (AIP) or decision in principle (DIP), allows you as a first time buyer or second time buyer to demonstrate to an estate agent that you are a serious and that your offer is realistic and affordable.
It’s is worth noting that the mortgage in principle is not binding and they could still refuse you a mortgage on those terms, however it is an indication of what you can borrow.
Why apply for a mortgage in principle (AIP) or (DIP)?
So why not just jump ahead and apply for an actual mortgage rather than a mortgage in principle first? Well, the truth is it’s quicker, with less hassle and enable you to be in a position to make a firm offer on the your chosen home.
Will I need a mortgage in principle?
Having a mortgage in principle is not mandatory, however there are many reasons that it will be in your interest to get one.
1. A mortgage in principle will give you a to understand what you can afford, therefore you will know how much you be able to offer when trying to purchase your home. You may be surprised and be able to afford a better home than you first thought or on the flip side you may need to reconsider and scale back on your ambition.
2. With a mortgage in principe your estate agent will most certainly take your offer more seriously and sometimes you will be limited on your viewing of a property unless you have a mortgage in principle.
3. Being offered a mortgage in principle will significantly reduce the risk of being rejected by a lender in the future and provides the opportunity to explore your chances of being approved. You will also avoid running the risk of being rejected and put a black mark against your name for future lending.
Will I need a mortgage in principle?
You can apply for a mortgage in principle as soon as you are serious about looking for a new home and have intent to purchase. Having a mortgage in principle in place ahead of your house search will allow you to focus your efforts on a price bracket within your means of lending. Once you have attained a mortgage in principal it will give you huge confidence going into negotiations as you have already done the diligence to know you can ‘in theory’ buy the property.
When should I get a mortgage in principle?
You can apply for a mortgage in principle as soon as you are serious about looking for a new home and have intent to purchase. Having a mortgage in principle in place ahead of your house search will allow you to focus your efforts on a price bracket within your means of lending. Once you have attained a mortgage in principal it will give you huge confidence going into negotiations as you have already done the diligence to know you can ‘in theory’ buy the property.
If you want to get a guide on how much you can borrow use our Mortgage calculator to find out how much you might be able to borrow as well as how much it might cost a month.
Can applying for a mortgage in principle affect my credit rating?
A mortgage in principle is generated following a credit check against your name, with either a soft or hard search, which will be dependant on the lender. A soft search as it suggest is a lighter check against your name and will not leave a footprint or viewable to other lenders where as a hard check will. This isn’t a problem, however be sure not to seek too many views on your file within a short space of time, otherwise lenders will question why you are continuously asking for credit and may be a reason for rejection in the future.
It’s worth finding out which lenders do soft searches and which use hard searches beforehand.
Your credit rating can be impacted by multiple factors and sometimes without your knowing, so it is always good practice to find out early rather than when you want to be making an offer of the home of your dreams
How do I get a mortgage in principle?
Call our team at Expert Mortgages or complete a mortgage search unlocking our access to thousands of mortgage deals so can find the best potential mortgage deal for you.
By working with us on a mortgage in principal means we can have the right deal in place for you, therefore meaning as soon as your offer is accepted you can just call us up and ask us to proceed with the full application, eliminating having to go through the same process again with other vendors.
How much does a mortgage in principle cost?
Expert Mortgages, Mortgage in principal is free of charge, however other might charge for this service, where as we only charge on your mortgage deal secured.
What do you need to get a mortgage in principle?
You will be required to provide the following information for both a Mortgage in Principal as well as your full application;
- Income (Payslips, Bank Statements, or accounts if self-employed)
- Spending (Credit card bills, utility bills, subscriptions, credit agreements
- Previous addresses past 3 years
Ensure all of the information that you provide is correct otherwise your actual mortgage may be rejected.
How long does a mortgage in principle last?
A mortgage in principle is generally withstanding for a certain short period of time, depending on the lender, but don’t panic, renewing your offer should be straightforward unless your circumstances or the economic climate has significantly changed.
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