What is a Mortgage in Principle?

What Is A Mortgage Decision In Principle?

A Mortgage Decision in Principle, often called a DIP, Agreement in Principle, AIP, Mortgage in Principle or MIP, gives an indication of how much a lender may be willing to lend. It is based on the information provided at the time and is always subject to lender criteria.

To obtain one, your mortgage adviser will usually need to understand your income, regular commitments, deposit, credit profile and property plans. The result can help you make more confident decisions before you start viewing or offering on a home.

What Information Is Needed?

You will usually need to provide personal details, address history, income information, employment details, regular financial commitments, deposit information and details of anyone buying with you. Depending on your circumstances, an adviser may also ask for documents such as payslips, accounts, bank statements or credit report information.

Credit Rating And Credit Checks

When a lender assesses an Agreement in Principle, it may run either a soft or hard credit check depending on the lender. A soft search is usually less visible to other lenders, while a hard search can appear on your credit file. Your adviser can explain the likely approach before submitting anything.

If you have had late payments, defaults, CCJs or other credit issues, it may still be possible to explore options, but the lender choice and outcome will depend on your circumstances. You can also read more on our Adverse Credit page.

Does It Guarantee A Mortgage?

No. A Mortgage in Principle is only an indication. It is not a promise that a lender will approve your final application, and it does not guarantee the property will be acceptable to the lender. The full application, valuation, documents and underwriting still matter.

Advantages Of Getting One

A Mortgage in Principle can help you understand your likely budget, show estate agents that you have started your mortgage planning, and highlight any issues early. It can be especially useful before viewing properties, making an offer or planning a move.

Mortgage Offer Vs Agreement In Principle

A mortgage offer is different. It is issued after the lender has assessed the full application, supporting documents and property valuation. An Agreement in Principle is an earlier indication, while a mortgage offer is the formal confirmation of the lender’s willingness to lend, subject to the offer conditions.

Can First-Time Buyers Get One?

Yes, first-time buyers can apply for a Mortgage in Principle. It can be a helpful first step when working out your budget and understanding your deposit position. Read more in our First Time Buyers guide.

Home movers can also benefit from early guidance, especially where the onward purchase depends on deposit, equity, income or affordability. Our Moving Home page explains more.