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3 Reasons You Should Get a Pre-Approved Mortgage Before You Start Your House Search

Natalie Wilson

Sep 11, 2024

When it comes to buying a home, whether it’s your first or your forever home, one thing that the majority of people will need is a mortgage.

A mortgage is defined as when a bank or lender gives you money to purchase a property. In return, you agree to pay back the loan with interest over a set period of time, usually between 15-40 years.

Like any loan, the amount you can borrow depends on your financial situation; how much your current income is, any other credit in your name, other commitments, etc.

But why do you need to worry about the mortgage before you even start looking at new homes? Here’s 3 good reasons why a pre-approved mortgage offer is worth getting before you search:

1. It Helps You To Narrow Your Search

There would be nothing worse than falling in love with a property, viewing it and beginning to plan where the TV would go, only to find you can’t actually get a mortgage on that property.

Having a pre-approved mortgage decision will guide you on how much you could realistically afford and allow you to narrow your search to show only homes in your budget. Saves a lot of time and heartache!

2. Understanding The Monthly Cost of Your New Home

Just because a bank is willing to lend you a certain amount, might not mean you feel it’s affordable. Everyone’s lifestyle is different, and there are other costs to factor in such as the running costs of the home when living there, how many holidays and outings you want to be able to go on, etc.

When you use a mortgage tool to calculate your potential borrowing ability, you’ll also be given an indication of the current mortgage rates in real time, from mainstream lenders. This will then also show you a monthly figure for how much the mortgage will cost you over time, so you can then decide if it’s affordable based on your own personal lifestyle.

3. Most Agents and Housebuilders Require Proof of Affordability

Most homes, new or old, will require a ‘Mortgage In Principle’ (sometimes referred to as a Decision In Principle) to prove that you can afford to buy the home you are making an offer or reservation on.

Having this pre-approval will allow you to view potential new homes and fall in love in the knowledge that you can make an offer on the home (or place a reservation on a new build home), and comfortably afford the monthly repayments at the current interest rate.