Step 1 – Get an approval from the bank

Application Stage

The first step in the process of getting a mortgage is to get a written approval from the Bank this is generally valid for 3-6 months. This approval in principle (often referred to as AIP) will show you in writing what your borrowing capacity from the different banks are. This will also be an early indication of any problems that will ultimately mean that you will be unsuccessful in getting a mortgage.

Your approval in principle is not a legal document but a written approval that your application has been accepted subject to certain conditions. Provided you meet these conditions then you are another step close to obtaining a mortgage.

Your approval is based on the information you will have to supply to the banks and this is the first commitment from the bank. This is an important document but additional check and information will be needed such as a clean credit history, valuation report on the new property and other information relevant to your individual circumstances before the bank will release your mortgage.

The benefit of getting this approval is that you will get a clear indication of how much your borrowing capacity is and what percentage of a loan you will get such as 100% (not a chance!), 95% (dream on!), 92% or in today economic climate it maybe a lot less.

This will then allow you to go view potential house with a budget in place. You will also be able to see what interest rates you can choose from and what your repayments will be each month. All this information is vital before you begin your house search.

Having an approval in principle also place you in a strong position when bidding for a house. You are able to strengthen any offer you put down by informing the Auctioneer that you are mortgaged approved. Auctioneers will get a heart attack if they find out you are approved. You will become part of the golden circle and expect to be treated like royalty. That is how rear an approval in principle is now.

With your approval in place you can have the confidence of putting your deposit down know that you are over the first step of the process. But do not under any circumstances sign a house contract based on getting a written approval. If you have a competent solicitor then this wouldn’t happen anyway.