Uk mortgage question

[Ponderingwindow]

just something I’m a bit confused about as an outsider reading about buying homes in the uk. People keep talking about finding a mortgage after making an offer. Do you not get mortgage pre-approval there? Basically an agreement from your lender on how much they will loan you. It still gives the lender the right to review the specific home and make sure it’s valued appropriately.

Yes we do have that. Good practice is to have pre-approval in place (agreement in principle), place an offer and then make a full application when the offer is accepted.

Yes getting a mortgage in principe is what everyone should have before house hunting. Usually they're valid for six months. Obvs not a guarantee a lender will lend on a specific property.

Yeah but it takes two minutes to get a MIP these days. You really need the checks etc to make sure you can actually afford your mortgage.

Yes, you do. It's called an agreement in principle. AIP. It's a piece of paper from a mortgage lender agreeing the amount they would be prepared to lend you based on your income and circumstances.

You don't have to have one, but estate agents and vendors like it as it shows you are probably good for the money and gives you some piece of mind that a lender is likely to give you what you need.

It is no guarantee that they will give you the money as that will depend on their valuation of the house and probably further checks on you once you confirm you wish to go ahead with a particular purchase. It's just a good indication that based on what you've told them, they will lend you X amount.

It also does not mean that you must take your mortgage from that particular lender, you are still free to shop around after you've made your offer but it's likely to be a quicker process if you already have an agreement in principle with a lender.

*peace of mind!

You can’t apply for the mortgage proper unless you know what house you want it for. You don’t know which house you want it for unless you’ve had your offer approved!

so:

agreement in principle
offer accepted
full mortgage application

@Ponderingwindow I assume you’re from the US based on your terminology I believe you are comparing to the US system.

In the US you have a mortgage pre approval and mortgage pre qualification. The mortgage in principal in the UK is closer to the mortgage pre qualification in the US as it’s light checks and quick and easy.

For pre qualification the checks are more thorough but obviously makes approval quicker down the line.

Since you’re buying in the UK you need a mortgage in principle and speak to a mortgage broker to understand how much you can afford to reduce the risk of your application being rejected.