Mortgage FAQs

General

What is a Mortgage in Principle (AIP/DIP)?
An Agreement (or Decision) in Principle is an official indication from a lender of how much they might be willing to lend you based on your initial financial information. It shows sellers you are a serious and qualified buyer.

When should I start looking at mortgages?
It is best to speak with an advisor before you start viewing properties so you know your exact budget and can move quickly when you find "the one".

How much can I borrow?
Lenders typically offer between 3.5 and 4.5 times your annual gross income. However, they will also heavily scrutinise your monthly outgoings, existing debts, and credit history.

Deposit & Costs

How much deposit do I really need?
The absolute minimum is usually 5%, but a 10% deposit is much more common and unlocks more competitive interest rates.

What other costs should I budget for?
Beyond your deposit, you should save an extra 3-5% of the purchase price to cover:

• Stamp Duty (if applicable).
• Solicitor/Conveyancing fees.
• Lender arrangement & valuation fees.
• Survey costs.
• Removal/moving costs.

Can I get a mortgage with a "gifted" deposit?
Yes, many lenders accept deposits gifted by family members, though they will require a signed "gifted deposit letter" to prove it is not a loan that needs to be repaid.

Types of Mortgages

Fixed-rate vs. Variable-rate: What's the difference?
Fixed-rate: Your interest rate stays the same for a set period (e.g., 2 or 5 years), giving you payment certainty.
Variable/Tracker: Your rate can go up or down, often following the Bank of England's base rate.

What is a "repayment" mortgage vs. "interest-only"?
Repayment: You pay back both the interest and the original loan amount each month. By the end of the term, you own the house outright.
Interest-only: You only pay the interest. The original loan amount stays the same and must be paid back in a lump sum at the end of the term.

Special Circumstances

Can I get a mortgage if I'm self-employed?
Yes, but you usually need to provide at least two years of certified accounts or SA302 tax forms to prove your income stability.

Can I buy at auction with a mortgage?
Yes, but it is risky because you typically have only 28 days to complete the purchase after the hammer falls. You must have your finance fully arranged before bidding.

What happens if I want to move house before my current deal ends?
Many mortgages are "portable," meaning you can move the deal to a new property. If not, you may have to pay an Early Repayment Charge (ERC) to switch.

Application & Documentation

What documents will I need to provide?Lenders typically require:

• 3 months of payslips and your latest P60.
• 3-6 months of bank statements.
• Proof of ID (Passport / Driving Licence) and Address (Utility bills).
• How long does the whole process take?

An AIP can take just minutes or hours. Once an offer is accepted on a house, a full mortgage offer usually takes 2-4 weeks. The entire buying process from offer to keys often takes 3-5 months.

Other questions:

Shared Ownership (NI Co-ownership housing association)
This is a scheme that allows you to buy part of a property with the housing association putting in the rest of the money. You can typically buy between 50% and 90% yourself, usually financed by a mortgage, and you'll then pay a nominal rent to the housing association for their share. You can normally purchase additional shares or buy out the housing association completely at any time, subject to affordability. Some lenders will lend you 100% of your share without requiring an additional deposit so it can be a great way to break away from renting into home ownership. This is often a cheaper way to buy a home than a traditional mortgage and often cheaper than renting. It also allows you to build up equity in the property.

Is an AIP/DIP a gurantee of a mortgage being approved?
No, sadly it's not. The AIP/DIP doesn't normally include a full assessment of your employment or income but relies on the information which you provide. If you have a lot of overtime, bonuses or variable hours then lenders may not use all of your income affecting how much you can borrow. Many lenders do a more detailed credit check once you make a full application so an initial "YES" at DIP/AIP stage can become a no. A good broker will make a full assessment of your circumstance before requesting a DIP/AIP but not all do.

Do I need Mortgage Broker?
Mortgage brokers typically have access to all mortgage lenders meaning that they can match your circumstances to the best lender. You could go to your own bank or building society directly but they may not be the best match or offer you the best rate. Mortgage brokers often do more than just give advice. Most will also submit and manage the application on your behalf, giving you a better chance of success, and walk with you through the house buying process, answering questions or dealing with issues if they arise. Even if your broker charges a fee of a few hundred pounds it is often money well spent but beware of high broker fees.