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The MortgageLab

Getting a Decision in Principle

Once you’ve decided to make a change and remortgage, the process is much the same as when you found your original mortgage. First, a search for the right deal, then a decision in principle, and finally applying and committing to a new mortgage – one that suits you and your circumstances better.

What is a decision in principle?

Once you’ve talked to your First Mortgage advisor and gone through your budget and aims for a remortgage, you’ll leave with a mortgage in principle. This is a confirmation from the lender of whether and how much they will lend to you.

This does not mean you then have to apply for that particular mortgage, it just means that you have an idea of what they would offer if you did. Getting a decision in principle means the lender will look at your ability to pay, your credit history and how robust you’d be financially if circumstances changed.

The decision in principle if usually limited to a certain amount of time (around 3 months for most deals), so you have time to think about your decision before you go ahead and commit. After this time, you have to reapply and this will show on your credit records.

How to apply

Your advisor will talk you through the application process and let you know what documents you need to apply. These are likely to include:

– proof of your income from the last three months (payslips or business accounts, bank statements and income tax accounts)
– proof of identity, such as a passport or driving licence
– proof of address, such as a recent utility bill

Key stages and timescales

The remortgage process takes place over four key stages:

  1. Talk to your advisor about what options are available to you given your financial picture, how much you’ve paid back already and what you have left to pay, what deals are out there, and which ones work best for you.
  2. Work through your income and outgoings to get a picture of what you can afford, check your credit report is accurate and likely to give you a good credit rating, and get a decision in principle from your preferred lender.
  3. Apply to your lender – your First Mortgage advisor will do this for you using the documentation and information you supply.
  4. Review the mortgage offer from your new lender, commit to the revised mortgage deal and then wait for your new (lower) payments to be confirmed.

First Mortgage advisors will be with you every step of the way and are on hand to answer questions at any point during the process.