When starting the journey of buying a property, it is a really good idea to get a Decision in Principle. This is essentially the first part of a mortgage application. Your details are given to a lender who asses the application, complete a credit check and then confirm if they will lend to you and if so, how much they will lend.
There are a few things you should consider when getting a Decision in Principle.
- Some lenders are more generous with the amount they will lend, so if you are looking to borrow the maximum you can, it is advisable to ask a mortgage advisor to help you work out who is likely to lend you the most.
- Most lenders complete a soft footprint credit check when you apply for a Decision in Principle. This means that even though a credit check has been completed, it does not affect your credit score. On the full application of a mortgage, this is converted to a hard footprint which does reduce your credit score. It is very important to be mindful about getting too many hard footprint checks done. A few of these could be enough to stop a lender from giving you a mortgage.
- A Decision in Principle normally lasts for 2 or 3 months. After that, a new one will need to be obtained.
If you would like any further information or would like our help obtaining a Decision in Principle, please get in touch.
It makes sense to know what your budget is when buying a property. There are lots of people who don’t get a Decision in Principle first. They fall in love with a property and then find that even though their offer has been accepted, they can’t get a big enough mortgage. This is very demoralising and upsetting for you but also the seller.
- It is very common for estate agents to want you to have a Decision in Principle if you offer on a property. This is because they want to be able to tell the seller that you are a serious buyer and have the resources to be able to buy their property. Simply put, it helps them avoid agreeing a sale and it falling through because the mortgage can’t be obtained.
- A Decision in Principle is based on you giving the correct information, but the lender does not require any evidence at this stage. When the full mortgage application is submitted, the lender asks for evidence of income, ID and normally bank statements. If the disclosed income doesn’t match the supporting documents, the lender can reject the application or offer a lower amount of mortgage.
- Most lenders produce a certificate which confirms that you have been provisionally approved for a mortgage. It normally shows how much the mortgage company is prepared to lend.