What Documents Are Needed for a Mortgage in Principle?

Before viewing properties or making a serious offer on your potential dream house, a mortgage in principle can provide you with a clearer estimate of your mortgage budget, helping you narrow down the never-ending property listings down to your personal top contenders.

In this article, we explain exactly what lenders will request before issuing a mortgage in principle and how a mortgage in principle can help you find your perfect home. Let’s begin.

What Proof of Income Do You Need for a Mortgage in Principle?

To apply for a Mortgage in Principle (MIP), lenders will ask for an overview of your income, employment and financial commitments. This forms part of their initial mortgage affordability assessment and helps determine your potential borrowing power.

The exact income documents for a mortgage in principle can vary depending on how you apply. If you apply through a mortgage broker, they will often review your income documents upfront to verify your circumstances and recommend the most suitable lenders.

In the case that you are applying directly to a lender, you will usually only be asked to provide the information needed for that lender’s own mortgage in principle assessment, with supporting documents requested later if you proceed to a full application.

Mortgage in Principle Documents for Employed Borrowers

For employed applicants, the documents required to apply for a mortgage in principle can include:

• Your latest three payslips
• Your most recent P60
• Details of your employer and job role
• Evidence of bonuses, commission or overtime, where applicable

Mortgage in Principle Documents for Self-Employed Borrowers

For self-employed applicants, the documents required to apply for a mortgage in principle can include:

• SA302 tax calculations
• Tax year overviews
• Accountant-prepared accounts
• Details of salary and dividends if you operate through a limited company

It’s important that the information you provide is as accurate as possible, as it will be verified during your full mortgage application. If any details are incorrect, or your verified income is lower than declared, the amount you can borrow may change or your application could be declined if you no longer meet the lender’s affordability criteria.

What Information Do Lenders Require?

Lenders request this information to complete an initial assessment of your finances to estimate how much you could potentially be able to borrow and determine whether you meet their initial lending criteria.

If you are applying through a mortgage broker, they will usually request and review this information and supporting documentation upfront to ensure you’re matched with the most suitable lenders for your application.

The table below summarises all the information lenders need for a Mortgage in Principle application:

At this stage, lenders will also usually carry out a soft credit check as part of their initial assessment. It’s important to note that a soft credit check provides an overview of your credit profile and does not affect your credit score.

If you later decide to proceed with a full mortgage application, your chosen lender will usually carry out a hard credit check as part of their final assessment.

How Accurate Does the Information Provided Need to Be?

When applying for a Mortgage in Principle, the information you provide should be as accurate and honest as possible to reflect your genuine financial position.

The main reason for this is because a mortgage in principle will only ever be as accurate as the information it is based on. If incorrect figures are provided, you may receive a borrowing estimate that doesn’t match what you can realistically afford or your true mortgage eligibility.

For example, incorrect information on a Mortgage in Principle application could lead to:

• An inaccurate borrowing estimate
• Delays during your full mortgage application
• A reduced borrowing amount
• Your mortgage application being declined

The impact of incorrect details on a mortgage in principle often becomes a problem when a lender begins verifying the information provided.

If the information provided does not match the supporting evidence submitted later, the lender may determine that you cannot borrow as much as your mortgage in principle originally indicated.

For this reason, it is always better to provide realistic figures from the start, rather than relying on rough estimates. A slightly lower borrowing estimate based on accurate information is often far more useful than an inflated figure that may not be achievable when you come to submit a full mortgage application.

What Happens After Getting Your Agreement in Principle?

The next steps after securing a Mortgage in Principle will usually depend on where you are in the buying process. For most people, the journey after receiving an AIP will look something like this:

1. Use your Mortgage in Principle to guide your property search
2. View suitable properties within your estimated budget
3. Make an offer on a property
4. Have your offer accepted
5. Submit a full mortgage application
6. Provide the documents requested by the lender
7. Wait for underwriting checks and the property valuation
8. Receive a formal mortgage offer, if approved

In addition to this list, a mortgage in principle can also be used to demonstrate to estate agents that you are a serious buyer who has already taken the first step towards securing a mortgage.

It’s important to note that the move from a mortgage in principle to a full mortgage application is when your chosen lender will carry out a much more detailed assessment. This usually includes verifying your income, identity, bank statements, credit commitments and other supporting documents before deciding whether to issue a formal mortgage offer.

How Can a Mortgage Broker Help You Get a Mortgage in Principle?

A mortgage broker can assess your financial circumstances before recommending lenders whose criteria are most likely to suit your full mortgage application.

By reviewing your income, expenditure and supporting evidence at the start of your mortgage journey, a mortgage broker can match you with lenders whose criteria best suit your circumstances, increasing your chances of securing a Mortgage in Principle and progressing to a formal mortgage offer.

At Boon Brokers, our fee-free mortgage advisers help buyers understand exactly what lenders are looking for before an application is submitted. Whether you’re employed, self-employed or have more complex income arrangements, we can help you understand your options and prepare for the next stage of the mortgage process.

When it is time for you to move from a Mortgage in Principle to a full mortgage application, your lender will need to verify your income using supporting documents that are relevant to your circumstances. Understanding what proof of income is needed for a mortgage can help you prepare the right evidence and avoid unnecessary delays.