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Guide to mortgage approval in principle
If you’re looking to buy a property, getting an Approval in Principle is an important step before you apply for a mortgage.

It can help refine your property search and give you an advantage when dealing with the agent and seller. Let’s look at what Approval in Principle means.

What is a mortgage Approval in Principle?

An Approval in Principle is an indication from a bank or financial institution of how much they could be willing to lend you to buy a property. Also known as a decision in principle, or mortgage offer in principle, it’s based on an initial assessment of your creditworthiness and ability to repay the loan.

Remember, this pre-approval is not a guarantee of a home loan, just an indication of how much the institution may be willing to lend you.

Why should you get an Approval in Principle?

Once you’ve made the major decision to buy a property, the next step is to work out what you can afford. This depends on a few factors, such as your income, how much you have for a deposit, and whether you have a good credit score.

At this stage of your property search it can help to apply for an Approval in Principle. 

Here are some of the reasons to apply:

  • You’ll get an idea of how much you can borrow
  • It’s quick
  • It’s free
  • It's valid for 60 days
  • You can show a seller or agent that you’re serious

When you have the Approval in Principle and know what you’re able to afford, you can start searching for suitable properties in your price range.

This can take a while, but when you find your ideal home, you can show the seller that you can afford it. This puts you in a stronger position when making an offer, especially in competitive situations where the seller receives multiple offers. 

How long does it take to get an Approval in Principle?

It takes an average of 60 minutes with HSBC, provided you submit the correct documentation during working hours. It may vary with other institutions. It's quick and simple. 

How long is a mortgage in principle valid for?

It’s generally valid for up to 60 days, but again, this depends on the institution you request it through. This will give you some time to search for the right property before applying for a mortgage. 

How do you get an Approval in Principle?

First, you’ll need the following documents:

  1. Valid passport, visa, or Emirates ID (your ID will need to be verified in a branch)
  2. Income statement, such as your salary slip

You can complete this form and a mortgage adviser will call you back, or you can visit a branch. 

Takeaway

It makes sense to get an Approval in Principle before applying for a home loan. It’s free, fast, and easy. And it can prove to sellers and an estate agent that you can afford a property and are serious about buying it. 

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Disclaimer

This article provides general information about mortgages. HSBC UAE may not offer all the products or options mentioned. This article should not be relied upon as financial advice.