Mortgage in principle

Why getting a mortgage in principle early helps

Most people do this the wrong way round. They find a house, fall for it, and then start working out whether they can borrow enough. By then the emotional decision has already been made.

You'll know your actual budget

Affordability calculators online give you a rough national average. A mortgage in principle is based on your real income, your real commitments and a real lender's criteria. The two can be a long way apart, particularly if you are self-employed or contracting.

Estate agents take you more seriously

Agents are asked to qualify buyers before putting offers to their seller. Turning up with a mortgage in principle marks you out as somebody who has done the groundwork, and in a competitive situation that matters.

You'll find out about problems while there's still time

This is the big one, and it's why we push it so hard. If something on your credit file is going to cause a problem, or your income is going to be assessed in a way you weren't expecting, far better to discover that now than three weeks into a purchase with a seller waiting on you.

Most of the things that derail an application can be fixed or worked around given a bit of time. Very few can be fixed in a hurry.

You can move quickly when you need to

Good properties go fast. Having the groundwork done means you can offer the same day rather than asking the agent to hold on while you speak to someone.

What a mortgage in principle is not

It is not a guarantee that a lender will lend. It is based on the information provided at the time and it is subject to a full application, a valuation of the property and the lender's full checks.

Circumstances change, lender criteria change, and a property can be valued at less than you agreed to pay. A mortgage in principle is a strong indicator, not a promise.

It usually lasts somewhere between 30 and 90 days depending on the lender, and can normally be renewed if your search takes longer.

Does it affect your credit file?

It depends on the lender. Some run a soft search, which only you can see and which has no effect on your file. Others run a hard search, which is recorded and visible to other lenders.

This matters. Several hard searches in a short space of time can make the next lender more cautious, which is one of the reasons applying to lender after lender on your own is a bad idea. We'll tell you which kind of search a lender runs before anything is submitted.

What we'll need from you

• Who you are, and your address history
• What you earn and how you earn it, whether that's payslips, accounts or a day rate
• What you owe, including credit cards, loans and car finance
• Your deposit and where it's coming from
• A rough idea of the property and price range you're looking at