When it comes to purchasing a property, one of the first steps you should take is to obtain a mortgage in principle. This is an estimate from a lender of the amount you can afford to borrow, and it can be an incredibly valuable tool in your search for a new home.

Also known as an agreement in principle or decision in principle, a mortgage in principle is a written indication from a bank or building society of how much they may be willing to lend you.

Which documents are needed for a mortgage in principle?

There is a short list of documents that will be needed to submit an accurate mortgage in principle, such as:

• Proof of income/bank statements
• Current financial commitment information
• Address history
• ID

A mortgage broker will request these documents from you so that they can gain a clear understanding of your personal circumstances. Even though a mortgage in principle isn't as in-depth as a full mortgage application, the correct information is still required for the application so that an accurate decision can be made by the mortgage lender.

Why do estate agents require a mortgage in principle?

One of the primary advantages of obtaining a mortgage in principle is that it allows you to determine how much you can afford to borrow before you begin searching for potential properties.

Although it is not legally binding, it is often taken seriously by estate agents and can demonstrate to them that you are a serious and credible buyer, this is important as it gives the seller a sense of security to know that their buyer can afford the property.

This can help you to save both time and money, as you will not waste your time viewing properties outside of your budget. It also provides you with the confidence to make offers on properties that are within your means, as you already know what you can afford to borrow.

In addition, obtaining a mortgage in principle is a quick and easy process. It can often be completed within an hour or two, depending on the lender, and only requires basic information about your financial situation. While a mortgage in principle is not a guarantee that you will be approved for a mortgage, it can give you a realistic idea of what to expect and can help to streamline the application process.

Credit history check

It is important to note that obtaining a mortgage in principle requires a credit check. This can be either a soft search or a hard search, depending on the lender. A soft search provides a quick check of your credit file without leaving a visible mark, while a hard search will show up as an application for credit. Therefore, it is important to consider the potential impact on your credit rating before applying for a mortgage in principle. We use check my file as this gives us insight to the credit file from 3 different credit agencies, to get signed up visit the website here.

Overall, obtaining a mortgage in principle is a smart and essential step in the home-buying process. It not only helps you to determine your budget and make informed decisions, but it can also demonstrate to estate agents and sellers that you are a serious and credible buyer.

If you would like an agreement in principle, get in touch with us today at 0151 662 0188 or email [email protected]