How to get a mortgage agreement in principle

Refreshing your Rightmove every two seconds? Stoked about finding the house of your dreams? Hold your horses for just a moment. The chances are that first, you’ll want a mortgage agreement in principle. Here, we’ll take a look at exactly what that is, why it can be handy and how to get one. Enjoy!

What is a mortgage in principle?

Ever heard of a mortgage in principle? How about an agreement in principle, decision in principle or mortgage promise? Most of the time, these words are used to describe the exact same thing!

A mortgage agreement in principle is an official document that a lender can give you to show how much they think you could borrow (lenders are the people who give out mortgages). Basically, if a lender gives you one of these documents, it means they think you’re pretty likely to get approved for a mortgage when you apply for one. Get in!

Normally, this is the first step towards buying a home and happens before you even start viewing properties.

Do I need a mortgage in principle?

Just like that weekend away you’ve been eyeing up for weeks, you don’t need a mortgage in principle. But you’ll probably want one. And (unlike the weekend away!), if you take the plunge and get a mortgage in principle, you’ll have absolutely nothing to feel guilty about – a mortgage in principle is completely free.

Here are the main reasons for getting your hands on one.

• Peace of mind: If a lender gives you a mortgage agreement in principle, it means that, based on what they know about you, they think you’d get approved for a mortgage. Happy days!
  

• Avoid rejection: If your mortgage application gets rejected, this can negatively impact your credit score (a score that shows how good you are with money), which can make it harder for you to get a mortgage in the future. Applying for a mortgage in principle first is a good trial run.

• Helps you budget: A mortgage in principle will give you a good idea of how much a lender will be willing to let you borrow. So, it means you can go and view properties you actually stand a chance of being able to afford!
  

• Makes estate agents happy: A mortgage in principle will show estate agents that you’re serious about buying a property (and that you have a decent chance of being able to afford one). Many estate agents won’t accept an offer on a property unless you have a mortgage in principle, and some won’t even let you go on house viewings without one!

How to get a mortgage in principle

Getting a mortgage in principle is normally pretty quick and easy. You can either:

• Apply directly to a lender
• Use a mortgage broker (also known as a mortgage advisor)

We’d normally recommend using a mortgage broker. That’s because, even though you can apply directly to mortgage lenders, there are over 100 lenders in the UK! So, it can be hard to know which lenders are most likely to say yes. And even harder to know which will be willing to lend you the most money, or to give you the best deal.

On the other hand, an independent mortgage broker will know the ins and outs of the different mortgage lenders and can compare the market to find the best one for you. You’ll have to dig out a few documents for them (things like bank statements and ID) but once that’s done, they’ll often be able to get you a mortgage in principle in as little as an hour. That’s right, you just put your feet up and pour yourself a bevvy while they sort out the whole application for you!

By the way, some online mortgage brokers will give you a mortgage in principle without actually going to a lender for you. If you’re thinking: ‘huh? I thought only lenders could give out mortgages in principle?!’ then you’re half right, but there is a catch!

The document you get given by a lender is technically called a mortgage agreement in principle. Don’t get us wrong, most people still call it a mortgage in principle for short. But some mortgage brokers (mostly the online ones) take advantage of that and will give you a ‘mortgage in principle’ (without the word ‘agreement’ in it) that hasn’t been okayed by a lender.

These documents can still be handy for showing estate agents and giving you a rough idea of how much you might be able to borrow. But they don’t actually show you whether there’s a lender out there who could be willing to lend you the money. But worth getting all the same!

Will a mortgage agreement in principle affect my credit score?

Worried about your credit rating? There’s no need! A mortgage agreement in principle won’t affect your credit score.

If you get a ‘real’ mortgage agreement in principle with a mortgage lender, they’ll run a ‘soft credit check’ when you apply for an agreement in principle. This is just a quick look at your credit history and credit file, which won’t affect your credit score.

If you get a quick mortgage in principle with a mortgage broker, this won’t affect your credit score at all, and often won’t carry out a soft credit check either. It’s just an indication of how much you can borrow to show estate agents you are a serious buyer.

Only when you’re happy you want the mortgage and want to go ahead and make a full mortgage application, that’s when they’ll run a ‘hard credit check’ and this will become a record on your credit file. This check will look at data from credit reference agencies, and your overall credit history to make sure you’re in good shape to pay future mortgage payments.

What happens after a mortgage in principle?

Let’s imagine that you’ve got your mortgage agreement in principle and you’ve finished ringing every friend in your phonebook to let them know. What happens next?! Well, here’s a quick lowdown.

1. Go house hunting: Now that you know how big of a mortgage you’re likely to get, you can go and view properties that are in your price range!
   

2. Put in an offer: Once you’ve seen a house and got that feeling, it’s your chance to put in an offer. Often, the estate agent will ask to see your mortgage in principle at this point. Then, you cross your fingers and pray that your offer gets accepted. Touch wood!
   

3. Apply for a mortgage: Has your offer been accepted? Congrats! Now’s when you ask your lender to turn your mortgage in principle into an actual mortgage offer. If you used a mortgage broker for your mortgage in principle, you’ll just need to give them the go-ahead and they’ll sort it all for you.

4. Get a solicitor involved: You’ll need a conveyancing solicitor to sort out the legal side of things, known as the ‘conveyancing.’ Check out our guide to how long conveyancing takes to find out exactly what this involves.

5. Wait for your mortgage valuation: Your mortgage lender will carry out a valuation survey on the property you want to buy. This is where they check how much they think the property is worth so they can be sure they’re lending you the right amount of money.
   

6. Get a survey done: Your lender may have just done a survey on the property, but it won’t be super detailed. Make sure you get your own survey done by a RICS chartered surveyor so you can check there are no major issues with the property. If there are, you might want to reduce your offer or even consider pulling out.
   

7. Get a mortgage offer: After a lot of waiting, you’ll (hopefully) get that mortgage offer you’ve been waiting for. In other words, you’ll find out you’ve been accepted for an actual mortgage, rather than just a mortgage in principle! This is one of those moments that definitely calls for your fanciest bottle of champers.

8. Exchange: Once all the legal work is done, you can exchange contracts. This is what it’s called when you and the seller legally agree to go through with the house sale. After this, you can’t pull out.
   

9. Complete! Completion day is the day you finally get the keys to your new home! All the money goes through and you can now enjoy sitting in an empty house with a well-deserved takeaway on your lap. Bliss!

For a better idea of how long each stage of the process will take, check out our mortgage application timeline. 

How reliable is a mortgage in principle?

Let’s put it like this: getting a mortgage agreement in principle is a good sign that you’d get accepted for a mortgage. But it isn’t a guarantee.

A mortgage in principle only shows that, from what a lender knows about you, they think you’d get approved for a mortgage. However, there are a few things that can go wrong between getting your mortgage in principle and getting approved for a full mortgage...

• Credit check: It’s normal for lenders to do a credit check when they consider you for a mortgage in principle. This is where they check your credit score to see how good you’ve been with money in the past. Some lenders will just do a ‘soft’ credit check at this point, which is a quick look as opposed to a full check (which means it won’t negatively impact your credit score). But when you apply for a full mortgage, they’ll need to do the full thing, which could throw up things they didn’t know about you earlier.
  

• Incorrect info: When you apply for a mortgage in principle, you’ll need to give your lender (or broker) info about your salary, expenses, loans and more. If it turns out that any of the info you gave them was incorrect, your lender might not be happy to give you a mortgage anymore.
  

• Your circumstances change: Your lender will have given you a mortgage in principle based on what they know about you. If that info changes, for example, you change your job or your salary drops, you might not fit their criteria anymore. The same goes if you can’t put forward as big a deposit as you originally thought.
  

So, in summary, if you got accepted for a mortgage in principle, things are looking pretty good for you. But there’s still a chance you could get rejected later down the line (cue many tubs of Ben + Jerry’s ice cream). 

Ultimately, the best thing you can do once you have a mortgage in principle is to sit tight, try not to make any big life changes, and hope for the best. You got this!

How long does a mortgage in principle last?

There’s one more thing you need to know before you go off and get your hands on that mortgage in principle we keep banging on about: mortgages in principle have expiry dates!‍

Normally, they’ll only last for 60 to 90 days. ‍

If you’re thinking: ‘How am I supposed to find a property to buy within 60 to 90 days?!’ don’t panic.

First things first, before you get a mortgage in principle, it’s useful to do some research on property websites and apps like Rightmove and Zoopla. Take some time to get familiar with what kind of properties are out there and what your dealbreakers are. That way, once your mortgage in principle comes through, you’ll have a good idea of what you’re looking for and you’re more likely to find the right fit before it expires.

Secondly, if your mortgage in principle does expire, it’s not the end of the world! Remember that you don’t actually need one to apply for a mortgage. You could just go ahead and put an offer in on a property without one. Or, if your estate agent is bugging you for a valid mortgage in principle, you could just reapply for a new one. What we’re trying to say is that you have options!

Ready to get yours?

Ready to start your house hunt with your best foot forward? A mortgage in principle could be the answer.

Not only is it a great way to show estate agents and sellers that you’re a serious buyer, but it can also help you to understand what properties you’re going to be able to afford and it can give you that peace of mind you’re after (or at least, as much peace of mind as you can get before you’re approved for an actual mortgage!). If that sounds good to you, just get in touch with a mortgage broker who’ll be able to guide you through every step of the process. Good luck!

Need help finding one of these awesome people? Check out Tembo¹, they've got award-winning service, and will guarantee to get you the best mortgage deal. Plus, get 50% off their fee with Nuts About Money.