This credit checking process is actually no different from simply applying for a mortgage. You would find a deal that you are interested in, and make the application to the lender. You can do this before you find a property that you're interested in to speed up the buying process.

You can either go direct to a lender or apply via a broker if you would prefer to get advice. Either way, you will need to go through the paperwork.

Finding the best deal for your mortgage

You need to first find the deal that you want to go for. To do this effectively, you should search all of the deals on the market. You can do this by visiting our whole-of-market based mortgage comparison table.

Remember to check the overall cost of borrowing, do not just be led by the cheapest rate, as there are additional charges to consider, including set up costs and exit fees.

You should take into account:

  • The interest rate and how long it applies

  • The type of rate: fixed rate, discounted, or variable rate

  • What the rate reverts to at the end of the 'deal' term

  • Any overhanging penalties from extended tie-in terms

  • Arrangement fees

  • Redemption fees

  • Whether fees will be added to your mortgage - you will pay interest on them if so

  • Eligibility criteria

While this list may not be exhaustive, it gives a good idea of the kind of areas you need to consider.

Applying for your agreement in principle

Once you have decided on the deal you want, you need to apply for it. You can sometimes do some of the paperwork online, but you will usually need to send proof of your income. This will come from:

  • Payslips

  • Three years of accounts if you are self-employed

  • Three months' worth of utility bills as proof of your current address

  • A form of photo ID, such as a passport or driving licence

The lender may stipulate certain conditions about the mortgage in principle, such as specifying what type of property it can and can't lend against.

How long is your agreement in principle valid for?

Once you have the agreement in principle, you usually have six months to decide on whether you want to take up the deal or not. This can give you flexibility, as it means you can decide to accept the mortgage deal or not within this time frame.

If it takes you some time to find the property you want to buy, then you may find that the interest rates have gone down from the point at which you arranged this mortgage in principle.

If that is the case, and you're not going to jeopardise your property purchase as a result, you may want to speak to another lender about a better deal for you and let the pre-arranged mortgage lapse. You will need to go through another credit check and may lose money by leaving your previous deal, so take advice if you are unsure of the best course of action.