How reliable is a mortgage in principle?
The mortgage application process can be confusing and stressful for both experienced buyers and those buying for the first time. One thing people often struggle with is working out how much they can borrow for their mortgage.
Before submitting your mortgage application, you will first get a mortgage in principle. This isn’t a 100% guarantee of anything but can be reassuring and an indicator of roughly how much you could borrow from your chosen lender.
SUMMARY: A mortgage in principle does not fully confirm whether a lender will approve your mortgage application. It is used as an indication of how much the lender might allow you to borrow, to help you decide whether to continue with a full application.
More about mortgages:
- What is a mortgage?
- How much do I need to earn to get a mortgage?
- How much can I borrow for a mortgage?
What is a mortgage in principle?
A ‘mortgage in principle’ is a document from a lender or mortgage broker. It is a quick and simple way to learn how much you could be able to borrow based on the information you have provided.
You can approach a lender directly, either online, over the phone or in branch. You also have the option of consulting an experienced mortgage broker who can provide insight into which lenders will be your best options.
The main question we are answering on this page is how ‘reliable’ these offers are. Realistically, a mortgage in principle is not a promise and is more of a guide as to how much the mortgage provider may be willing to lend.
You will need to pass the lender’s affordability checks before the mortgage in principle becomes an official mortgage offer. Any changes in circumstance will also affect this process, so you could be offered more or less than you originally expected.
Is a mortgage in principle reliable?
If the information you have provided the lender is honest and accurate, your mortgage in principle should indicate the potential amount the lender will offer you. Don’t be fooled into believing this a promise that this lender will offer you a mortgage.
This is not a commitment on the lender’s behalf and they will assess a variety of factors before approving (or declining) your application.
The questions asked when applying for a mortgage in principle will be less comprehensive than in a full mortgage application. They will however usually ask about:
- Your income
- Your outgoings vs how much you earn (debt to income ratio)
- How much you have saved for a deposit
- A rough idea of how much you would need to borrow
How to get a mortgage in principle
There are a few ways that you can apply for a mortgage in principle. You can:
- Apply online via the lender’s website (not always an option)
- Apply over the phone
- Apply in branch (if your lender has in person locations e.g a bank)
- Contact an independent mortgage broker who can apply on your behalf
Can you get an online mortgage in principle?
Many lenders give you the option of applying for a mortgage in principle online. All you will need to do is go onto their website and find the relevant page.
Most high street lenders will be able to quickly tell you whether you could borrow from them, based on filling in a form with a few simple details.
Lenders that can provide mortgage in principle online include:
You might need a non-standard mortgage or have other factors that would impact your application (e.g., credit issues). In this case, you are usually better applying to more specialist lenders who are experienced with these applications.
Does a mortgage in principle affect credit score?
Applying for a mortgage in principle will not normally affect your credit score. This process doesn’t involve a hard credit check, which is something that would show on your credit file.
How long does a mortgage in principle last?
It is understandable to wonder ‘how long is a mortgage in principle valid for?’. The last thing you want is for this to run out before you have begun your full application.
The amount of time a lender will give before you would need to apply for a new mortgage in principle can vary. A standard maximum time is around 90 days from when you receive your mortgage in principle. Halifax for example state that theirs are valid for between 30-90 days depending on the mortgage.
Mortgage in principle: what can go wrong
There are a few common reasons why your mortgage in principle doesn’t end up leading to a mortgage offer. This includes:
- Inaccurate information being supplied to the lender
- Your circumstances have changed since you first applied e.g. change in job role or income
- Your credit score drops due to other reasons
- You end up needing to borrow more than you originally thought
- The type of property you want to buy is ‘non-standard’ and the lender doesn’t approve this
- The lender discovers additional debts or credit issues causing you to fail affordability checks
What to do if mortgage is declined after ‘agreement in principle’
If your mortgage agreement in principle hasn’t led to a mortgage offer, this doesn’t mean no lender will be willing to give you a mortgage.
There are various reasons a lender might decline to offer you a mortgage and there can still be options available to you.
- Try another lender: some lenders aren’t well suited to certain types of applicants or mortgage. If your income is more complex or you’re not applying for a standard mortgage, a specialist lender might be a more suitable choice for you.
- Wait and try again: if you’re very keen to get a mortgage with this particular lender, you can give it a few months and try again. This is provided you can quickly fix whatever issues caused your original application to be declined.
- Speak to an independent mortgage broker: If you’re struggling to find a mortgage provider willing to lend to you, it might be best to speak to an expert.
Note: It isn’t advisable to submit application after application to mortgage lenders within a short space of time. The affordability checks required will involve a hard credit check. This will appear on your credit report and will make it harder to get the mortgage you need.