© Andrey Kiselev gift
© Andrey Kiselev
Advantages of pre–approved mortgages
Mortgage loan approval
Provided that you meet a few other criteria, such as being a resident of the UK for at least 2 years, you’re under-65 and there are no more than two applicants, you have guaranteed pre-approval for a home loan.
Low rate mortgage deals
Banks cherry-pick the best and most reliable payers for pre–approved offers because they want them as customers. You may get an exclusive mortgage offer that isn’t available to the wider community of homeowners.
Remortgage uncertainty
Getting approval for a mortgage is a major worry to many families. Knowing that you have a pre–approved offer provides genuine peace-of-mind to an uneasy homeowner or first-time buyer.
Avoid further credit checks
Having too many credit searches in a short period of time can be damaging to your credit rating.
Disadvantages of pre–approved mortgages
Excellent credit history
Part of the mortgage qualification process is credit scoring the applicant. You will not be pre–approved for a mortgage if you have a history of defaults, CCJ’s, bankruptcies, IVA’s or home repossessions.
Failure to check other deals
You may want to accept a pre–approved mortgage because you haven’t got to do anything extra to get accepted. However, just because you have guaranteed acceptance doesn’t necessarily mean that you’re getting the best deal. You should use a comparison site or mortgage broker to see if there is a more favourable deal that’s currently available.
Need to prove affordability
Many financial institutions offer customers the chance to use a budget planner. The bank uses the information contained in this report to ascertain whether you can comfortably afford to make the repayments on a mortgage.
Comply with borrowing limit
You can usually get pre–approved for a loan of up to £500,000. This is enough for most homeowners. However, if you’re a high net worth individual with a mortgage on a very expensive property, you may need to be re-assessed.