Why Would I Get a Mortgage in Principle?
There are a few reasons why you might want to get a MIP. Firstly, it will give you an indication of how much money you can borrow from a lender, which can be really useful when you’re trying to figure out your budget.
Secondly, if you find a property you like and the seller is looking for proof that you’re serious about buying it, having a MIP in place will show them that you’re good to go. Finally, some estate agents will only work with buyers who have proof of funds in place, so having a MIP can make the whole process run more smoothly.
How Do I Get a Mortgage in Principle?
Rather than going directly to a bank, it is recommended that you speak with a mortgage broker who has access to the whole of the market. That’s because they will be able to look at the best option for you. Some lenders may lend more than others, for instance, and it will all be dependent on your circumstance.
They’ll then carry out some initial checks – e.g. a credit check – and give you an idea of how much they could lend you. If everything looks good so far, they’ll give you what’s called a ‘decision in principle’, which is basically their way of saying “yes, we’re happy to lend you this amount of money”.
What Happens Next?
Once you have your decision in principle, the next step is to start looking for properties within your price range. Once you’ve found somewhere you like and had an offer accepted, you will then submit a full mortgage application and your lender will then carry out what’s known as ‘underwriting’. This is when they’ll ask for things like proof of income such as payslips or self assessments along with your bank statements, so they can be sure that nothing has changed since they did their initial checks and that the information provided is accurate. They will also instruct a valuation on the property you are looking to purchase.
Assuming everything is still OK at this stage and the valuation has come back acceptable, they’ll give you what’s called ‘A Mortgage Offer’, which spells out exactly how much they’re willing to lend and what the repayments will be along with the conditions of the mortgage.
A mortgage in principle can be really useful if you’re thinking about buying a property, as it gives you an indication of how much money you can borrow from a lender but also peace of mind that if you find something you love you can proceed to put forward an offer.
Contact me to get your mortgage in principle in place:
*Your home may be repossessed if you do not keep up repayments