Mortgage in Principle Explained: Why You Need One Before House Hunting
If you've started thinking about buying a home, you've probably come across the term "Mortgage in Principle" or "Agreement in Principle". It's one of the first things estate agents will ask about when you start viewing properties, and it's an important step that many first-time buyers don't fully understand until they need it.
Here's what it is, why it matters, and how to get one.
What is a Mortgage in Principle?
A Mortgage in Principle (MIP), sometimes called an Agreement in Principle (AIP) or Decision in Principle (DIP), is a written estimate from a lender confirming how much they would in principle be willing to lend you. It's not a guaranteed mortgage offer, but it gives you a clear indication of what you can borrow based on your income, outgoings and credit history.
The lender carries out a soft credit check and reviews basic financial information, then issues a certificate that's typically valid for 60 to 90 days. This certificate is what estate agents and sellers will ask to see when you make an offer on a property, to make sure you can afford it.
Why do you need one before house hunting?
There are several practical reasons to have a Mortgage in Principle in place before you start viewing properties seriously.
it gives you a realistic budget
there's no point falling in love with a £350,000 property if a lender will only offer you £280,000, and an MIP tells you exactly where you stand from the start.
estate agents take you more seriously, because they know you're a credible buyer rather than someone window shopping.
sellers are more likely to accept your offer because they know your finances are in order, particularly in a competitive market where multiple buyers might be making offers on the same property.
it speeds up the buying process, because you're already part way through the mortgage application when your offer is accepted.
For more on what to ask before making an offer, read our guide to making an offer on a house.
How to get a Mortgage in Principle
You can get a Mortgage in Principle directly from a lender or through a mortgage broker. Going direct is faster if you already know which lender you want to use, but a broker can compare deals across the market and may find a better rate or a lender more likely to approve you based on your circumstances.
To apply, you'll typically need to provide identification, three to six months of payslips and bank statements, details of your income and outgoings, information about any debts, and a sense of the property price you're looking at.
The lender then runs a soft credit check, which doesn't affect your credit score, and issues the certificate if you pass their initial criteria. The whole process can take anything from 15 minutes online to a few days if it's done through a broker.
The difference between an MIP and a full mortgage offer
This is where many first-time buyers get caught out. A Mortgage in Principle is not a guaranteed offer, it's an indication based on the basic information you've provided. The lender hasn't yet verified your income, checked the property valuation, or done a hard credit check.
A full mortgage offer is only issued after you've made a formal application following an offer being accepted. At that point the lender carries out a full credit check, verifies your income, instructs a property valuation, and either approves or declines the actual mortgage. Things can change between the MIP and the full offer, particularly if your circumstances change, the property valuation comes in lower than expected, or the lender's criteria shift.
How long does an MIP last?
Most Mortgages in Principle are valid for 60 to 90 days, though some lenders extend up to six months. If your house hunt takes longer than this, you can ask the lender to renew the MIP, which usually requires updated financial information.
If you're early in your search, it can be worth waiting until you're seriously viewing properties before getting an MIP, so you don't end up needing to renew or reapply.
Will it affect your credit score?
A Mortgage in Principle uses a soft credit check, which leaves no visible footprint on your credit file and doesn't affect your score. However, multiple MIP applications to different lenders within a short space of time can sometimes raise flags, so it's better to use a broker who can submit one application to the most appropriate lender rather than applying to several yourself.
A full mortgage application, on the other hand, involves a hard credit check, which does show on your credit file. Multiple hard checks within a short period can negatively affect your score, which is another reason to use an MIP and a broker rather than making multiple full applications.
The full checklist
The Home Truths Guide includes 100+ essential questions to ask at every stage of buying a home in the UK.
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