Getting a Mortgage in Principle

A Mortgage in Principle, or Agreement in Principle (AIP) or Decision in Principle (DIP), is a statement from your lender of how much they’re prepared to lend you ‘in principle’ based on basic information such as your salary, how much you’d like to borrow and your monthly outgoings.

However, as the offer is in principle, it’s not set in stone. Should you make a formal application with the same lender at a later date, the lender reserves the right to change the details of the loan or to decide not to go forward with the loan altogether. The reason for this change will be made clear in your application process.

Getting a Mortgage in Principle can make you a more attractive buyer, as it shows the seller and estate agent that you’re serious about buying.

No, a Mortgage in Principle does not guarantee a mortgage. This is because the lender only has a limited view of your financial situation. For this reason, getting an agreement doesn’t guarantee a mortgage nor does it make any guarantees about the amount you’re able to borrow.

You can usually get a Mortgage in Principle within 24 hours, however this may vary depending on your lender. At Newcastle Building Society our mortgage advisers will usually be able to give you a verbal decision within one hour providing you have all the information at hand that is required.

A Mortgage in Principle is typically valid for up to 90 days. If it expires before you need it, you can always re-apply. However, it may be best to avoid this to prevent too many credit searches damaging your credit score.

A Mortgage in Principle can affect your credit score, but not always. This will depend on whether your lender does a hard or soft search of your records.

A soft search records the credit check as simply an enquiry on your file, whereas a hard search will mark that you’ve made an application for credit. Having a lot of applications for credit on your file can discourage lenders, as it may imply you have difficulty repaying your loans.

You may want to check with your lender before applying for a mortgage in principle, to see what kind of search they’re going to conduct.