What is a mortgage in principle?
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In short: A mortgage in principle — also called an agreement or decision in principle — is a lender's indication of how much they might lend you based on a preliminary credit check and declared income. It is not a guarantee of a mortgage, but estate agents often ask for one before accepting an offer.
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Reviewed by Kaiser Khan
An agreement in principle (AIP) or decision in principle (DIP) is a short application where you give basic details — income, outgoings, deposit and property price range — and the lender runs a soft or hard credit search. If successful, you receive a certificate or email stating an indicative loan amount, usually valid for 60 to 90 days.
An AIP helps when house hunting: sellers and agents know you are a serious buyer with finance that could stack up. In competitive markets it can strengthen your offer. However, it is not a formal mortgage offer — the full application later involves detailed affordability checks, proof of income, bank statements and a property valuation.
Be careful with repeated applications. Some lenders use soft searches that do not affect your credit score; others use hard searches that leave a footprint. Multiple hard searches in a short period can concern lenders. Ask whether the check is soft or hard before applying.
Getting an AIP before viewing is sensible if you are ready to buy, but align the amount with realistic affordability including stamp duty, legal fees and moving costs. Use the mortgage stress test mindset — could you afford repayments if rates were several points higher? Full mortgage offers follow once you have a specific property and complete underwriting.
Primary source: gov.uk/buying-a-home/preparing-to-buy
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