5 min read
Getting a mortgage in principle helps you understand your budget and reassures sellers that you’re a serious buyer. In My Home Move Conveyancing’s guide, we explain how to apply and share our tips to improve your chances of approval.
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A mortgage in principle shows sellers you’re a serious buyer and helps you set a realistic budget before house hunting.
Most mortgage in principles are valid for 30–90 days and usually involve a soft credit check.
You’re not tied to a lender until you receive a formal mortgage offer.
In this article:
A mortgage in principle, also known as an agreement in principle (AIP), is an initial indication of whether you will be approved for a mortgage of a requested amount.
Securing a mortgage in principle before you begin your property search offers several advantages. Firstly, it will help you understand your buying power and focus your search on properties within your price range.
Having a mortgage in principle also strengthens your position when making offers. Sellers and estate agents are more likely to take you seriously because it shows you're prepared and financially capable. It can even speed up the buying process once your offer is accepted since you've already completed part of the mortgage application.
Find out more about the cost of buying a house.
When you're looking to get an agreement in principle, you have a couple of options to consider. One route is to consult a mortgage broker who can help you explore mortgage deals you might qualify for. Alternatively, you can reach out directly to a lender, especially if there's a specific deal that interests you.
While it might simplify things to get an agreement in principle from the mortgage provider you're likely to choose, it's not essential. You're not tied to that lender at this stage, so you can still change your mind about who to borrow from when it comes to applying for a full mortgage. There's no need to worry about being locked in too early.
Getting an agreement in principle is straightforward. You can start your application as soon as you’ve decided you’re ready to house-hunt, as it might save you time when getting your offer accepted.
Typically, you can complete the process online through your lender’s website and will get your results within a day. You’ll just need to provide your personal details, including:
Your name
Date of birth
Three years of address history
Income information – such as payslips, bank statements and pensions or investments
Outgoings – including travel costs, childcare and school fees
Once your Mortgage in Principle is secured, let us handle the legal side of your move. The expert conveyancers we work with can ensure a smooth process from start to finish.
After you’ve applied for a mortgage in principle, your lender will make either a ‘soft’ or ‘hard’ credit check to assess your eligibility by reviewing your credit history and debts (like loans and credit cards). Soft searches don’t harm your credit score and aren’t visible to potential lenders that may review your credit reports, however, hard searches will show that you’ve applied for credit. Having a lot of hard searches could negatively affect your credit score, as it suggests to mortgage providers that you’re having difficulties getting accepted by other lenders.
Most UK lenders now use soft credit checks for agreements in principle, but policies can vary. To avoid any surprises, it’s worth checking with your lender what level of credit check they’ll run.
Lenders consider several factors when deciding whether to grant you a mortgage in principle, such as:
Credit history and credit score: A strong credit score increases your chances of approval.
Income and employment stability: Having stable employment and a consistent income reassures lenders that you can repay the mortgage.
Existing debts and monthly commitments: Lenders assess your existing financial commitments to make sure you can handle additional debt.
Deposit size and loan-to-value (LTV): A larger deposit can improve your chances of approval and might even get you better mortgage rates.
Before applying, taking a few simple steps can significantly improve your chances of approval.
Check your credit report: Review it for any errors or discrepancies and address any issues that could negatively impact your credit score.
Reduce outstanding debts: This improves your debt-to-income ratio, making you more attractive to lenders.
Avoid applying for credit in the months leading up to your mortgage application: Multiple credit applications can raise concerns among lenders.
Save for a bigger deposit: This can increase your chances of approval and may also result in more favourable mortgage terms.
Find out in more depth how to boost your credit score.
Get in touch with one of the team
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quotations@myhomemoveconveyancing.co.ukMonday - Friday
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