A mortgage in principle is a lender's written indication of how much it would be prepared to lend you, based on the information you provide. It usually takes a day or less to obtain and typically lasts between 30 and 90 days. Most Leicester estate agents will ask to see one before putting your offer forward.
Why Leicester agents ask for one
An agent's job is to bring their seller offers that will actually complete. An offer from someone with a mortgage in principle is evidently more credible than one from someone who has not spoken to a lender.
In practice, across Leicester and the county, this means two things. Some agents will not submit your offer without one. A smaller number will not book viewings without it, particularly on properties attracting a lot of interest.
Getting one early therefore removes friction at exactly the moment you cannot afford delay.
What it is not
A mortgage in principle is not a mortgage offer, and it is not a guarantee.
It is based on the information you have given and, usually, a credit check. The full application involves verified payslips, bank statements, a property valuation and a proper underwriting assessment. Any of those can change the outcome.
The most common reasons a case that had a mortgage in principle later falls down:
- Income evidence does not match what was declared, particularly with bonuses, overtime or self employed figures
- Something on the credit file was not disclosed
- The property valuation comes in below the purchase price
- The property itself is unacceptable to that lender — a flat above commercial premises, non-standard construction, a short lease
How long it lasts
Most last between 30 and 90 days depending on the lender. Some run to six months.
If yours expires while you are still searching, it can normally be renewed easily. If your circumstances have changed in the meantime, the figure may change with them.
Note the distinction between the mortgage in principle and a later mortgage offer. The offer, issued after full underwriting, has its own expiry — commonly three to six months — and that one matters much more, because a chain that drags on can outlast it.
Does it affect my credit score?
Sometimes. It depends on whether the lender runs a soft or a hard credit check.
A soft check is visible only to you and has no effect on your score. A hard check leaves a footprint other lenders can see. One is harmless. Several hard checks in quick succession can look like you are being repeatedly declined, which does not help.
This is a good reason not to collect mortgages in principle from four different banks to compare them. A broker can tell you which lenders suit your circumstances and run the check once, with the right one.
What you will need
- Photo ID and proof of address
- Recent payslips, or accounts and SA302s if self employed
- Three months of bank statements
- Details of the deposit and where it came from
- Your credit commitments — loans, cards, car finance
Have these ready and the whole thing usually takes a single appointment.
Getting the number right first
A mortgage in principle tells you your ceiling. It does not tell you what is comfortable.
We would always rather have a conversation about affordability before producing the certificate, because the figure a lender will offer and the figure you should actually borrow are not always the same. That is particularly true if you have childcare costs coming, a car finance agreement ending, or plans that will change your income.
What if you are declined at this stage?
A declined mortgage in principle feels final. It usually is not.
Remember what has actually happened: one lender, applying its own criteria, has said no. That decision tells you nothing about the other eighty-nine. Lenders differ enormously on how they treat overtime, self employed income, recent job changes, thin credit files and historic adverse credit.
The important thing is not to immediately try another bank yourself. Each attempt may leave a hard credit footprint, and a run of them in quick succession reads badly to the next lender who looks.
Instead, find out why. Lenders are not always forthcoming, but the reason usually falls into one of three groups:
- Credit — something on your file, sometimes an error, sometimes a financial association with an ex-partner
- Affordability — income counted differently than you expected, or commitments weighing more than you realised
- Policy — you fell outside a rule that has nothing to do with your finances, such as time in current employment or a minimum income threshold
The first is often fixable. The second may mean adjusting the target price. The third simply means the wrong lender was approached.
This is the single most useful thing a broker does at this stage: knowing in advance which lenders are likely to say yes, so the check is run once with the right one.
Get one before you view
If you are starting to look in Leicester, get this in place first. It is free, it takes a day, and it stops you falling for a house you cannot buy.
Call 0116 277 7536 or read about first time buyer mortgages in Leicester.
More guides: first time buyer guides for Leicester.
