A mortgage agreement in principle, also known as a decision in principle or mortgage promise, is a preliminary certificate that gives you an estimate of how much a lender is willing to lend you. It’s not a guaranteed loan offer, but rather the first step in the mortgage application process.
This certificate provides you with an indication of the maximum amount you could borrow based on your financial circumstances and the lender’s initial assessment.
While a mortgage agreement in principle provides an estimate of your borrowing capacity, a mortgage offer is a formal commitment from the lender to provide you with a mortgage loan. The agreement in principle is a preliminary step, whereas the mortgage offer comes later in the process, typically after you’ve found a property and completed the full mortgage application.
Having a mortgage agreement in principle is crucial for several reasons:
- Understanding Your Budget: It gives you a clear idea of how much you can afford to spend on a property, helping you narrow down your search and focus on homes within your budget.
- Demonstrating Your Seriousness: Sellers and estate agents often prefer buyers who have a mortgage agreement in principle, as it demonstrates that you are serious about purchasing a property and have taken steps to secure financing.
- Streamlining the Process: It can expedite the home buying process by providing assurance to sellers and estate agents that you are financially capable of proceeding with the purchase.
Obtaining a mortgage agreement in principle is a straightforward process:
- Online Tools: Many lenders offer online mortgage calculators or tools that allow you to obtain an agreement in principle quickly and easily. These tools typically require you to provide some basic information about your financial situation and desired loan amount.
- Consulting a Mortgage Advisor: Alternatively, you can seek advice from a mortgage advisor who can help you navigate the process and find the best mortgage deal for your needs. They will gather information about your financial situation and present you with suitable mortgage options.
To obtain a mortgage agreement in principle, you’ll typically need to provide details such as:
- Existing credit agreements
- Addresses from the last three years
- Details of your income and its source
- Details of any other outgoings
Find the right mortgage for your needs with clear, personalised guidance from Pera Mortgages.
As UK-based mortgage brokers, we understand the complexities of the market. Let our seasoned experts steer you through the maze of options, ensuring a seamless experience tailored to your needs.
As UK-based mortgage brokers, we understand the complexities of the market. Let our seasoned experts steer you through the maze of options, ensuring a seamless experience tailored to your needs.
