Having a mortgage in principle at the start of your property hunt gives you a leg-up on the competition; it shows the sellers you’re a serious buyer and can even help speed up the process. Here’s what you need to know about mortgages in principle.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
What is a mortgage in principle?
Sometimes also called an agreement in principle (AIP), a mortgage in principle is an official estimate from a bank or building society (the mortgage provider) – often via certificate – that states how much they are willing to lend you.
It’s not a legally binding document, rather it’s a good indicator to estate agents that you’ve got the funds to back up your property purchasing aspirations. It’s not required to get a mortgage in principle before you begin your search, but it will back up any offer you put on a property.
What are the benefits?
We recommend potential homebuyers start the process with a mortgage in principle. Knowing exactly how much you’ll be able to borrow for your mortgage can have its benefits.
- It will help set clear limits when looking at properties.
- It can reduce the risk of applying for an exorbitant mortgage that you wouldn’t be able to afford.
- It prevents a possible rejection and a mark on your credit file, which could in turn make the home buying process even harder.
- It shows that you’ve got the bank’s backing and aren’t as risky as buyers who don’t come prepared.
Plus, depending on the types of properties you’re interested in and how much you’re working with, some estate agents won’t even offer viewings unless you have a mortgage in principle.
How long does a mortgage in principle stay valid?
It will vary from lender to lender, but in general, a mortgage in principle can last anywhere between 60 and 90 days.
If you haven’t been able to find a property or had an offer accepted before your time limit is up, you might have to get another. Normally, renewing an agreement in principle is relatively straightforward, but right now, your circumstances could have drastically changed since you initially secured the agreement.
If any of the details pertinent to the mortgage in principle application have changed during the initial period (a loss of a job, changing jobs, etc.) check with your mortgage broker or lender to confirm that your mortgage in principle is still valid, and renew if possible.
How do you get a mortgage in principle?
You can get a mortgage in principle directly from a lender, but by going through a mortgage broker – especially one who understands medical and dental professionals – you’ll not only save time during the mortgage process, but you’ll have access to the best mortgage deals on the market.
I’m happy to provide an overview of the process and connect you with the right lender for your needs. Get in touch with us to discuss applying for a mortgage in principle today.
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