In this brief guide, we will discuss what it means when a mortgage in principle is referred.

What does it mean for a mortgage in principle to be referred?

When a mortgage in principle is referred this simply means that the mortgage underwriter simply wants to have a more detailed look at your mortgage in principle application before deciding on if to approve your mortgage in principle or decline your mortgage in principle application.

What happens when you make a mortgage in principle application?

A mortgage in principle being referred is not a bad thing, in fact, it is simply due to how mortgage in principle applications are evaluated by most mortgage lenders.

When you submit your mortgage in principle application this is either evaluated using automatic computer systems or through manual underwriting done by an underwriter.

When you make a mortgage in principle application you will usually submit your:


Full address

Date of birth 

Employment status

Annual salary

Desired mortgage amount

Property price

Your credit score

Your credit score is a  very important factor and a mortgage lender may refer your mortgage in principle application if you have bad credit which needs further explaining.

Bad credit could include:

  • A county court judgement
  • Bankruptcy
  • A debt management plan
  • Missed credit repayment
  • Payday loans
  • Mortgage default
  • Individual voluntary arrangements

Manual underwriting vs automated 

Most mortgage in principle applications are done via automatic decision-making systems and then there are very few which go through manual underwriting except they are referred by the automated decision systems.

Automated underwriting is done when the mortgage lenders computer systems match their lending criteria with the information you have supplied in your mortgage in principle application.

Manual underwriting is when your mortgage in principle application is looked at by a manual underwriter.

This can sometimes have its benefits as it means you are able to supply further documents to the mortgage lender and ensure your mortgage

Use a mortgage broker

You may want to consider using an independent mortgage broker to get a mortgage.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.

This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. 

This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your mortgage is indeed a possibility before you make a full mortgage application. 

Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month.

It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.

Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.

They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.

In this brief guide, we discussed what it means when a mortgage in principle is referred.

If you have any questions or comments please let us know.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.