Getting a mortgage can feel like climbing a mountain. You take one step at a time.
A mortgage in principle is one of your first steps. It feels good to get one, but things can still go wrong. Let's look at what might happen and how to be ready.
A mortgage in principle is a statement from a bank or lender. It shows how much they might lend you to buy a home. It's not a final offer, but more like a promise to consider lending to you.
When you get a mortgage in principle, the lender checks some of your details. They look at your income, your spending, and do a quick credit check. Then they tell you how much they might lend you.
This helps you know what price homes you can look at. It also shows sellers that you're serious about buying.
A mortgage in principle is a good first step, but it's not set in stone. The lender hasn't done all their checks yet. They've only looked at basic information.
When you apply for the actual mortgage, the lender will look much deeper. They'll check all your income details. They'll look at your spending more closely. They'll do a full credit check. They'll also check the home you want to buy is worth what you're paying.
About 1 in 10 people with a mortgage in principle end up not getting their mortgage.
Even after you get a full mortgage offer, things can still go wrong:
It's important to keep the lender updated about any changes in your situation. Being honest from the start helps avoid problems later.
Most mortgage in principles last between 60 and 90 days. This gives you time to find a home you want to buy.
If your mortgage in principle runs out before you find a home, don't worry. You can usually apply for a new one. But remember that each new application might mean another credit check.
Some lenders will extend your mortgage in principle if you ask them. This can be better than making a new application.
No, a mortgage in principle does not guarantee you'll get a mortgage. It's more like a first step than a final decision.
The full mortgage application is much more detailed. The lender will check everything in greater detail. They'll also assess the property you want to buy.
Some reasons you might be turned down include:
Applying for a mortgage in principle is easier than you might think. You can do it in several ways:
When you apply, you'll need to provide some basic information:
You don't usually need documents at this stage, but having recent payslips and bank statements ready can help you give accurate information.
Most lenders will give you an answer quickly – often within minutes if you apply online. Some might take a day or two if they need to look at your details more carefully.
Once you have your mortgage in principle, you'll receive a certificate or letter that you can show to estate agents and sellers. This proves you're a serious buyer who is likely to get a mortgage.
If your mortgage in principle is lower than you expected, there could be several reasons:
If you're unhappy with the amount, you can talk to the lender. Ask them why it's low and if there's anything you can do to increase it. You can also try other lenders who might offer more.
Yes, you can have more than one mortgage in principle at the same time. This lets you compare offers from different lenders.
But be careful about how many you apply for. Some mortgage in principles involve hard credit checks that can affect your credit score. Too many checks in a short time can make lenders worried.
It's often better to use a mortgage broker. They can help you find the best deal without making lots of applications.
A mortgage in principle shows how much the lender might lend you, not including your deposit. You need to add your deposit to know the total you can spend on a home.
Example: If you have a £20,000 deposit and a mortgage in principle for £180,000, you could buy a home worth up to £200,000.
Most lenders want you to have a deposit of at least 5% of the property's value. A bigger deposit often gets you better interest rates and makes it more likely you'll be approved.
It depends on the type of credit check the lender does:
You can ask the lender which type of check they'll do before you apply.
Even if a lender does a hard check, the effect on your credit score is usually small. Your score will typically recover within a few months if you don't make other applications.
Remember, getting a mortgage in principle is just the first step. Be prepared for the full application process.
Stay honest with the lender and keep your finances healthy while you're house hunting. This gives you the best chance of turning your mortgage in principle into a real mortgage offer.
Disclaimer: We make every effort to ensure content is correct when published. Information on this website doesn't constitute financial advice, and we aren't responsible for the content of any external sites.
Zubin is a personal finance writer with an extensive background in the finance sector, working across management and operational roles. He applies his experience in customer communication to his writing, with the aim of simplifying content to help people better understand their finances.
Sign up for tips on how to improve your credit score, offers and deals to help you save money, exclusive competitions and exciting products!
