How to Get a Mortgage in Principle

Understanding how to get a mortgage in principle is an essential first step in the home buying process. Whether you’re a first-time buyer or looking to move home, obtaining a mortgage in principle can provide you with a clearer picture of your borrowing potential and demonstrate to estate agents and sellers that you’re serious about purchasing a property.

 

In this guide, we’ll explore what a mortgage in principle is, why it’s useful, what information lenders require, how to obtain one, and what factors may affect the success of your application. We’ll also look at the limitations of a mortgage in principle and how it relates to a full mortgage application. 

 

What Is a Mortgage in Principle?

A mortgage in principle (sometimes referred to as an agreement in principle or decision in principle) is a written estimate from a lender stating how much they may be willing to lend you if you were to apply for a mortgage. It is not a formal mortgage offer, and it does not guarantee that you will be approved for a mortgage.

 

Typically, this document is valid for 30 to 90 days, depending on the lender. It is based on the basic financial information you provide, such as income, outgoings, and any outstanding debts, as well as a credit check. The mortgage in principle gives a general indication of your borrowing capacity without assessing every financial detail.

 

Why Is a Mortgage in Principle Useful?

There are several reasons why obtaining a mortgage in principle can be beneficial during the early stages of your property search:

 

• It helps you understand how much you may be able to borrow.
• It shows sellers and estate agents that you’re serious and potentially in a position to buy.
• It may give you a clearer focus when searching for properties within your price range.
• It can highlight any credit issues early on, which might need resolving before making a full application.

 

While not mandatory, many estate agents prefer potential buyers to have a mortgage in principle before considering offers, so having one in place can help you progress with your property purchase more smoothly.

 

What Information Do You Need to Provide?

To obtain a mortgage in principle, you will usually need to provide the following information:

 

• Your full name and date of birth
• Current address and address history (usually for the past three years)
• Employment status and details of your income (including salary, bonuses, or dividends)
• Details of your outgoings (such as loans, credit cards, childcare costs)
• Information about any deposit you plan to put down

 

The lender will typically carry out a credit check. This may be a soft credit check (which doesn’t impact your credit score) or a hard credit check (which is recorded on your file). It’s worth confirming which type of check will be done, especially if you’re planning to approach multiple lenders.

 

How Long Does It Take to Get a Mortgage in Principle?

In many cases, a mortgage in principle can be arranged in as little as 24 hours, sometimes even sooner. The timeline depends on the lender, whether you’re using a mortgage broker, and how quickly you can provide the necessary information and documentation. For complex circumstances, or where further checks are needed, it may take slightly longer.

 

Where Can You Get a Mortgage in Principle?

There are a few different routes you can take to obtain a mortgage in principle. These include:

 

• Directly with a mortgage lender via their website, in branch, or over the phone
• Through a mortgage broker or intermediary who will help you assess your borrowing options

 

By working with a mortgage broker, you may receive guidance in reviewing a range of lenders’ criteria, which could help identify which options are more suitable for your circumstances, saving you as much time and effort as possible.

 

Soft Check vs Hard Check: What’s the Difference?

Understanding the difference between a soft and hard credit check is important when applying for a mortgage in principle:

 

Soft Credit Check

This type of check gives the lender a basic overview of your credit history without leaving a visible trace on your credit report to other lenders. It won’t affect your credit score, and it’s suitable for an early-stage indication of borrowing potential.

 

Hard Credit Check

A hard credit check is more thorough and leaves a footprint on your credit file. While one hard check is unlikely to impact your credit score significantly, multiple hard checks in a short period could raise questions for future lenders.

 

It’s worth checking with the lender or your broker which type of check will be carried out before proceeding.

 

Will You Definitely Be Approved for a Mortgage?

It’s important to understand that a mortgage in principle is not a guarantee that you will be approved for a mortgage. It is only based on the information provided at the time of the application. When you apply for a full mortgage, the lender will carry out more detailed affordability checks and may ask for additional documents, including:

 

• Bank statements
• Payslips or accounts if self-employed
• Proof of deposit
• Proof of identity and address

 

Changes in your financial circumstances, errors in the information provided, or new information uncovered during the full application process could affect the final decision.

 

What Can Affect the Outcome of a Mortgage in Principle?

Several factors can influence whether a mortgage in principle is granted and how much you’re estimated to borrow. These may include:

 

• Your credit history and score
• Your employment status and income level
• Outstanding debts and regular financial commitments
• Your deposit size and the value of the property you intend to purchase
• Accuracy of the information provided

 

Lenders also have different affordability criteria and policies, so the outcome can vary depending on which lender or lenders you approach. This is where working with a mortgage broker may help by supporting you in understanding which lenders’ criteria could be more aligned with your situation.

 

How Long Is a Mortgage in Principle Valid?

A mortgage in principle usually remains valid for between 30 and 90 days, depending on the lender. It’s a good idea to check the expiry date, especially if your property search takes longer than expected. If it expires before you apply for a full mortgage, you may need to request a new one. Be aware that if your circumstances have changed in the meantime, the new mortgage in principle may differ from the original.

 

Does Applying for Multiple Mortgages in Principle Harm Your Credit Score?

If each application results in a soft credit check, your credit score should not be affected. However, if multiple applications involve hard checks, these may show up on your credit report and could raise concerns with mortgage lenders during your full application process. It’s beneficial to seek support to help you navigate this process and reduce the number of applications you may need to make.

 

What Happens After You Get a Mortgage in Principle?

Once you’ve obtained a mortgage in principle, you can move forward with your property search with a clearer sense of budget. When you find a property you wish to buy, you’ll then need to submit a full mortgage application. This involves a comprehensive review of your financial situation and is when the lender conducts detailed checks.

 

During the full application process, the lender will also assess the property you intend to buy. This typically involves a valuation of the property to ensure it is worth the amount being borrowed. Additional documentation is also required at this stage, and the lender’s underwriters will review everything before a mortgage offer is made.

 

Can a Mortgage in Principle Be Declined?

Yes, it is possible to be declined for a mortgage in principle. Reasons for this may include:

 

• Poor credit history or low credit score
• Inaccurate or incomplete information
• High levels of existing debt
• Unusual income structure or recent changes in employment

 

If this happens, it might be helpful to review your credit report for any inaccuracies and seek out support to explore other lenders whose criteria may be more suitable for your circumstances.

 

Is There a Cost for a Mortgage in Principle?

Most lenders do not charge a fee for providing a mortgage in principle. It is designed to be a preliminary tool for both the applicant and the lender. However, any fees related to a full application, valuation, or arrangement will usually apply if you choose to proceed with that lender further down the line.

 

What If Your Mortgage in Principle Is Less Than You Expected?

If you receive a lower borrowing estimate than anticipated, it may be due to your debt-to-income ratio, credit record, or other financial commitments. Reviewing your finances and understanding more about lenders’ affordability calculations can help clarify your borrowing capacity. In some cases, it may be possible to adjust your expectations by increasing your deposit or reducing outstanding debts where possible.

 

Can You Make an Offer on a Property Without a Mortgage in Principle?

While it is possible to make an offer on a property without a mortgage in principle, many estate agents and sellers prefer buyers to have one in place. It provides reassurance that you may be able to secure financing and therefore be in a position to proceed quickly if your offer is accepted.

 

Conclusion

Securing a mortgage in principle is an early step in the mortgage process that can provide clarity, confidence, and credibility during your home buying journey. While it does not guarantee a successful mortgage application, it signals to sellers and estate agents that you are prepared.

 

By understanding what is involved, from the information required to the potential impact on your credit score, you can approach the mortgage in principle process with greater confidence. If you have specific financial circumstances or uncertainty around your eligibility, seeking support from a regulated mortgage advisor may help guide you through the options available and navigate the process as efficiently as possible.