A mortgage in principle — also called an agreement in principle (AIP), decision in principle (DIP) or mortgage promise — is a statement from a lender indicating how much they may be willing to lend you, based on an initial assessment of your financial situation. It is not a formal mortgage offer or a guarantee of lending, but it gives you a useful indication of your budget before you start house hunting.
What is a mortgage in principle?
When you apply for a mortgage in principle, the lender carries out a preliminary assessment of your financial circumstances — typically including your income, employment status, outgoings, credit history and the size of your deposit. Based on this, they provide a written statement saying they would be prepared to lend you up to a specified amount, subject to a full application and property valuation.
A mortgage in principle is usually valid for 60 to 90 days. After this period it expires, though you can usually renew it.
Do you need a mortgage in principle before viewing properties?
You are not legally required to have a mortgage in principle before viewing properties or making an offer. However, having one is strongly recommended for several reasons. Estate agents often ask for evidence that you have a mortgage in principle before accepting an offer, as it demonstrates you are a serious buyer who has taken initial steps to secure financing. Sellers are more likely to accept an offer from a buyer who can show financial readiness. It also gives you a realistic budget to work within before you fall in love with a property you cannot actually afford.
How to get a mortgage in principle
You can apply for a mortgage in principle directly with a lender or through a mortgage broker. A mortgage broker can search across multiple lenders to find the most suitable option for your circumstances and help you identify which lenders are most likely to accept your application — which can be particularly useful if your financial situation is not straightforward.
The application typically involves providing details of your income and employment, your monthly outgoings and existing debts, the size of your deposit, and your basic personal details. The lender may carry out a soft or hard credit check depending on their process. A soft search does not leave a mark on your credit file; a hard search does, so it is worth asking which type will be used.
Does a mortgage in principle affect your credit score?
This depends on the type of credit check the lender carries out. A soft search will not affect your credit score and will not be visible to other lenders. A hard search leaves a mark on your credit file and is visible to other lenders — multiple hard searches in a short period can negatively affect your credit score. Many lenders now use soft searches for mortgage in principle applications, but it is worth confirming before you apply.
Is a mortgage in principle a guarantee?
No — a mortgage in principle is not a guarantee that you will be offered a mortgage, or that you will be offered the amount stated. When you make a full mortgage application, the lender will carry out a more detailed assessment of your finances and commission a valuation of the property. The final mortgage offer may differ from the mortgage in principle, or in some cases may not be made at all if the full application reveals issues not apparent from the initial assessment.
What if your mortgage in principle is declined?
If your application for a mortgage in principle is declined, it is worth understanding why before applying elsewhere. Common reasons include a poor credit score, insufficient income relative to the amount sought, a high level of existing debt, or employment circumstances that do not meet the lender's criteria. A mortgage broker can help identify which lenders are most likely to accept your application and advise on steps you could take to improve your chances.