How To Get A Mortgage In Principle

Ready to start your home-buying journey? One of the first steps you’ll need to take is securing a mortgage in principle. It’s not a mortgage guarantee, but it does demonstrate to estate agents and sellers that you’re a serious buyer and can afford a property within a specific price range. 

In this guide, we’ll break down what a mortgage in principle is, why they’re necessary, what you’ll need to get one and what happens next. 

What Is a Mortgage in Principle?

A mortgage in principle (MIP) - often referred to as an Agreement in Principle (AIP) or Decision in Principle (DIP) - is basically a quick thumbs-up from a lender saying, “Yep, we’d probably lend you this amount.” It’s based on a few details you give them, like your income and credit score.

It’s not a legally binding offer, nor is it a guarantee that you’ll definitely get a mortgage (that comes later), but it gives a good indication of your borrowing power. MIPs can be arranged fairly quickly, and you can request one either online, over the phone or in person. 

Why Do You Need One?

There are several reasons why obtaining a mortgage in principle is important:

• Strengthens your position as a buyer: Sellers are more likely to consider your offer seriously if you can show proof that you’re ready to make a move. 

• Defines your budget: Knowing how much you could potentially borrow helps you target properties within your price range.

• Speeds up the home-buying process: Having a MIP in hand can streamline your application process when you're ready to proceed.

• Required by estate agents: Some estate agents might ask you for a MIP before arranging property viewings.

Ultimately, getting a MIP gives you confidence and clarity while navigating your property search. 

How Long Do They Last?

Most mortgage in principle agreements are valid for between 60 and 90 days. This timeframe should provide you with a solid window to search for properties and make an offer with the backing of the MIP.

Things to Keep in Mind: 

• If your MIP expires, you can usually renew it quickly unless your circumstances have changed.

• Lenders could reassess your financial situation and how much they’re willing to offer you for a mortgage once you’ve submitted a full application

How Long Does It Take?

Not long at all. Depending on the lender and how you apply, a decision for a mortgage in principle can take anywhere from a few minutes to 24 hours. Here’s how it breaks down: 

• Online: Fast and easy. Many lenders provide instant decisions. 

• Phone: Usually within a few hours after you’ve spoken with a Mortgage Advisor. 

• In-person: This route may take a little longer, but can be useful if you’re wanting a more detailed face-to-face discussion and additional advice.

Factors that could affect the timeline include the accuracy of your information and whether a soft or hard credit check is required (in almost all cases, only a soft credit check is required at this stage).

What Will You Need to Apply for One?

You don’t need a mountain of paperwork to get a mortgage in principle. But lenders will want some key personal and financial details to work out how much you could borrow. 

You’ll usually be asked for:

• Your full name and date of birth

• Where you’ve lived for the past 3 years

• Your job and income details

• What debts or credit commitments you have

• How much deposit you have saved

You won’t usually need to submit any documents (payslips, tax returns, bank statements, etc.) at this stage, but having them ready can be helpful if required and shows you’re prepared for submitting a full application later on. 

How Reliable Are They?

A mortgage in principle is a useful tool, but it’s important to understand its limitations:

• Indicative only: It’s based on a preliminary check and not a full assessment of your financial situation.

• Subject to change: Your official mortgage offer may differ depending on further checks, such as valuation and underwriting.

• Dependent on accurate info: If any information provided is inaccurate, the lender may revise or reject your application later.

That said, if your circumstances remain stable, your MIP should be a reliable early indication of what you can borrow for a mortgage. 

Does a MIP Affect Your Credit Score?

Usually, no. But this depends on the type of credit check used by the lender:

• Soft credit check: Most lenders use this method, which doesn’t affect your credit score and isn’t visible to other lenders.

• Hard credit check: A few lenders may conduct a hard check, which leaves a footprint on your credit file and may slightly impact your score.

Although hard credit checks are pretty rare for MIPs, it’s a good idea to confirm with your lender which type of check they use before applying, especially if you plan to apply with multiple providers.

Why Might You Be Declined?

There are several reasons why a lender might decline your application for a mortgage in principle:

• Poor credit history or recent missed payments

• Inaccurate or incomplete information provided

• Insufficient income for the desired loan amount

• High levels of existing debt or financial commitments

• Employment status that doesn’t meet lender criteria (e.g., self-employed with limited history)

If declined, take the time to review your financial situation, improve your credit score, and seek advice from a mortgage advisor, like us! 

Our mortgage team can assess your circumstances and find the right mortgage lender who’s better placed to help someone in your situation. Just click on the button below to make an enquiry and one of our Mortgage Experts will be in touch.  

Mortgage in Principle Vs. Mortgage Offer

While a mortgage in principle is an early estimate of what you might be able to borrow, a mortgage offer is a formal commitment from a lender and follows a full application, credit assessment, and property valuation.

The table below outlines the key differences between the two. 

In short, a mortgage in principle shows you what you COULD borrow, and a mortgage offer shows you what you CAN borrow. 

What Are the Next Steps?

Once you’ve received your MIP, it’s time to move forward confidently in your home-buying journey. Here’s what you can do now.

1. Start property hunting: Use your MIP to narrow your search to homes within your approved price range.

2. Arrange viewings: Estate agents may prioritise buyers who can show a mortgage in principle.

3. Make an offer: When you find the right property, use your MIP to support your bid.

4. Apply for a mortgage: Once your offer is accepted, begin the full mortgage application process.

5. Get a valuation: Your lender will assess the property to ensure it’s worth the agreed price.

6. Receive a formal offer: After all checks are complete, you’ll get your official mortgage offer.

7. Exchange contracts and complete: With your mortgage secured, you’re ready to complete the purchase.