Mortgage in principle
Updated: 30th Sep, 2024
Author: Charlotte Burton
A Mortgage In Principle (MIP) is a statement from a specific lender saying that they're likely to lend you a certain amount of money, based on some basic information you fill into a form.
A mortgage in principle is sometimes called an Agreement in Principle (AIP) or Decision in Principle (DIP).
Some things to note are:
- ❌ A mortgage in principle is not the same as a full mortgage offer. It's more like a rough initial check from a lender. Getting one doesn't guarantee that you'd actually get the mortgage when you apply.
- 🏦 Different lenders do mortgages in principle in different ways. Some show the maximum amount they might lend you. Others get you to tell them how much you'd like to borrow, and they then give a yes or no answer.
- 💳 A few lenders do hard credit checks when you apply for a mortgage in principle. Always check this before you apply. Doing too many hard credit checks within a short period of time can lower your credit score, which reduces how much you can borrow.
- 📝 Lenders tend to use the electoral roll to check your identity - so make sure you’ve registered to vote if you’re eligible to. You can register at gov.uk/register-to-vote
- You don't have to get a mortgage in principle.
- But, getting one allows you to have a bit more certainty about how much you could borrow (though it's not a guarantee).
- Attaching a MIP when you put in an offer also shows estate agents that you're serious about buying, because you've thought about your mortgage already. It also makes them more confident that you'll be able to afford the offer.
- An alternative to showing a mortgage in principle is to get your mortgage broker to talk to the estate agent, and confirm that you can afford to buy the property.
- If you're getting a mortgage in principle to prove you can get that mortgage amount, one can be enough.
- But, you might want to get more than 1 mortgage in principle.
- Firstly, if there are a few different lenders with mortgages you like the look of, you might want to check which are likely to give you a mortgage by applying for their MIP.
- Secondly, if you put different offers in for different properties, you might want to get a MIP that matches your offer each time. Showing an estate agent that you could afford a much higher offer might mean they push you harder to increase your offer in some situations.
- But beware: don't apply for more than a couple of mortgages in principle that do hard credit checks!
- To prove to yourself how much you could borrow, you could get a mortgage in principle right at the start of your property search. But remember that they only last 30-90 days.
- To back up an offer you're putting in, it's good to get a MIP for that specific offer amount just before you put an offer in.
- But beware: don't apply for more than a couple of mortgages in principle that do hard credit checks!
- Fill out a form on the lender's website with your deposit amount, income, outgoings, and addresses for the last 3 years. This should only take about 15 mins.
- Or, you can talk to your mortgage broker who can apply for you.
- You don’t need any documents at this stage to back up your statements.
SPF Mortgage Brokers
SPF, our recommended mortgage broker, can do the admin of applying for a Mortgage in Principal for you!
