Getting a Pre-Approved Mortgage, sometimes called an Agreement In Principle (AIP), or Decision In Principle (DIP), is something we recommend to all potential buyers. Once confirmed, a Pre-Approved Mortgage is usually valid for about 3 months, so like everything, timing is important.
It’s an integral part of all mortgage applications so why wouldn’t you get one before you start searching? That’s right, it’s part of the process your mortgage broker will go through when applying for your mortgage, so it makes sense to involve us from the very beginning.
Since the start of the COVID-19 pandemic, and during the national lockdowns, the housing market has remained open for business. Many estate agents have been asking home buyers for evidence of funds or mortgage pre-approval to show you are in a proceedable position to make a home purchase, before arranging viewings. As soon as you’re ready to go our mortgage brokers are here to get everything in place for you.
Why would you want a Pre-Approved Mortgage?
- It shows you how much you’re able to borrow when deciding on a budget
- By getting it done at the start of the process, you’re giving yourself ample time to work with a mortgage broker to secure a loan that’s exactly right for you – COVID-19 has significantly increased application timescales
- It shows sellers and estate agents that you’re serious in your house search
- It shows sellers and estate agents that you’re extremely likely to secure a mortgage
- Lender criteria has changed so much during the COVID-19 pandemic and it’s important to check how much of your income will be assessed in determining the mortgage amount available
How it works
A mortgage lender needs to know that you’ll be able to repay your mortgage. That’s why your mortgage broker will initially ask you to provide them with certain documents to help them work out what you can afford when they’re taking you through the mortgage approval process.
Basic information that you will be asked to provide and why
To gain a thorough understanding of your position your mortgage adviser will ask for copies of certain documents to help them form a complete picture of your finances and to obtain proof of your identity:
Because everyone needs to be sure that you are who you say you are…
A Passport and/or Driving Licence – if you don’t have either don’t worry, there are some alternatives.
To confirm what regular income you have coming in…
If you are employed, your latest 3 months wage slips showing details of any overtime, bonuses, commission or deductions.
If you are self-employed, your last 2 years SA302s & Tax Year Overviews.
If you don’t work or are retired, evidence of the benefits or pension income you receive.
To confirm any regular expenditure…
Your last 3 months bank statements and details of any other financial commitments, loans, HP, credit cards etc.
To confirm your credit status…
If you have any history of poor credit, we may need a copy of an up-to-date credit report (preferably CheckMyFile) to understand what happened and when. If you’ve had issues in the past, we work with a number of lenders who understand that life events can sometimes cause us to have financial difficulties.
Everyone’s personal circumstances are unique to them and your mortgage adviser will only ever ask for information that is relevant to their understanding of yours. The holistic advice we offer is tailored specifically to your situation and we’ll do all we can to find the most cost-effective deals available.
NOTE: Our mortgage advisers take GDPR seriously and any information that you share is dealt with in accordance with our privacy policy.
There are some unintended positives of having a Pre-Approved Mortgage
- It gives you the opportunity to really get to grips with all aspects of your financial life and help you to clearly plan for the future
- By speaking to a mortgage broker, we can share any useful tips and insights that may help you in your search for a home
- You’ll be in a strong position to negotiate the best price you can get on your new home; in the knowledge you can get the ball rolling on your full mortgage application as soon as possible
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.