the benefits of a mortgage in principle
A mortgage in principle gives you a clear understanding of how much you can borrow, whilst also putting you in a better negotiation position, as you can demonstrate to estate agents that you can borrow the money required.
Help you understand your Budget
Knowing the amount you can borrow helps you set a realistic budget for your home search, focusing on properties that you can afford, reducing the risk of financial strain.
Strengthens your Negotiation Position
Sellers are more likely to take your offer seriously, knowing that you have secured pre-approval and are a serious buyer. A lot of estate agents will request evidence you have pre-approval.
This can sometimes help you with negotiations.
Can Speed Up the Buying Process
Having a mortgage in principle can speed up the final approval process once you find a home, as much of the preliminary work is already done.
It also allows you to act quickly when you find a suitable property, potentially beating other buyers to an accepted offer.
Improves your Financial Planning
Knowing your maximum borrowing helps you plan for other costs associated with buying a home, such as legal fees, moving expenses, and initial repairs or renovations.
It also gives you a chance to address any credit issues that might affect your final mortgage approval, potentially giving you time to improve your credit score before the final application.
Avoid rising interest rates
Some lenders may offer to lock in an interest rate at the pre-approval stage, protecting you from rate increases while you search for a home. Don’t worry though, if rates decrease you can still select these. It’s a win / win really.
Increases Confidence and Peace of Mind
Knowing that a lender is willing to finance your home purchase can reduce the stress and uncertainty often associated with buying a home.
It’s clear that obtaining a mortgage in principle can provide significant advantages, from enhancing your bargaining power and expediting the buying process to improving your financial planning and giving you peace of mind.
