What happens when I get a mortgage in principle?

A mortgage in principle, also known as an “agreement in principle” or a “decision in principle” is written document from a lender stating how much it might be willing to lend you. While it isn’t a formal offer, it does help you get a rough (but realistic) idea of your property budget. It will typically be valid for 30 to 90 days.

If you are a first-time buyer it can be helpful to have this in place to get a clear idea of which lenders will lend to you and how much you could borrow. If you’re not a first-time buyer and have a property to sell - it can still be helpful to get an idea of your total budget.

It is usually free to get a mortgage in principle but some brokers might charge a fee – so it’s a good idea to check first.

No. But when the property market is particularly competitive some real estate agents can request to see your mortgage in principle when you make an offer or even request to see one if you want to view a property. However, when the housing market is cooler and less competitive, you might not be asked to show a mortgage in principle.

It is not a legal requirement to have a mortgage in principle before making an offer on a property – but if other buyers have this in place and you don’t it might put you at a disadvantage.

Many lenders offer the ability to apply online and if you have all the necessary information, you could get a decision in as quickly as an hour.

Lenders’ requirements can vary but typically you’ll need details about your income and expenses, along with address history and other personal information.

Information you’ll need:

• your name and date of birth
• your address history going back three years
• your income
• your monthly expenses
• the size of your deposit.

Maybe. When you apply for a mortgage in principle the mortgage provider will use the information you provide and then run a credit check. Some lenders will run a “soft credit check” which will not leave a mark on your file, but others will run a “hard check”, which is visible on your file. There is no maximum level of hard checks any one can or can’t have, but too many hard checks in a short space of time can negatively affect your credit rating. If it is not clear how your lender will check, you can ask. If you’re worried about a weak credit rating affecting your mortgage application, find out more in our guide Can you get a mortgage with bad credit?

A final mortgage approval is different to your mortgage in principle. It is a firm mortgage offer from a lender using the property you intend to purchase as security against the loan. While you can make an offer based on a mortgage in principle, in order to proceed to legally purchase the property you will need a full mortgage offer. A full mortgage offer is usually valid for six months but can be withdrawn if your income levels change or you become unable to work.

You might not. This is because even if your lender is satisfied that your financial circumstances are satisfactory to make repayments and afford the loan, they also need to be satisfied with the property you are purchasing. This means that even if your finances are sound, the lender can still reject your application on the basis that they are not comfortable with the property.

For example, some lenders won’t lend on homes without working kitchens or bathrooms, others won’t lend for properties that are in high rises above a certain level, or on a council estate.

If you’re not sure if your lender has any exclusions you can ask them after you get your mortgage in principle and once you have identified a potential property - but before you apply for the mortgage itself. If you’re still not sure what you can or can’t afford, use our mortgage affordability calculator.

Before you apply, get everything ready to put you in the strongest possible position. You’ll need to provide proof of identity and income to show that you can afford the mortgage repayments. This may mean up to six months of bank statements.

You will also need to get a valuation on your property. This survey checks if the property is worth the price you’re paying – or at least the amount you’re borrowing – before they approve your mortgage. It’s worth knowing that in most cases your lender will arrange this for you – and you can even ask your lender to upgrade your valuation.

Ask your lender who covers this cost. Some lenders cover the cost of a basic valuation and then if you want to upgrade you cover the difference. So  you might need to budget extra £150-£800 based on the property’s value. You may also want a Homebuyer’s survey which is best for regular homes in fair condition. See more in our guide Mortgage fees and costs when buying or selling a home.