Mortgage Agreement in Principle: A Simple Guide
Understand what a Mortgage in Principle is, why you need one, and how to get it. Your first step to confident house hunting in the UK.
What is a Mortgage in Principle?
A Mortgage Agreement in Principle (AIP), also known as a Decision in Principle (DIP), is a written statement from a mortgage lender indicating how much they would be willing to lend you based on an initial financial assessment. It's not a formal mortgage offer, but it's a crucial first step in the home buying process. It shows sellers and estate agents that you are a serious and credible buyer.
Key Takeaways
- Boosts Credibility: An AIP shows you're a serious buyer, giving you an advantage when making offers.
- Sets Your Budget: It gives you a clear and realistic budget for your property search.
- Soft Credit Check: Most AIPs only require a 'soft' credit check, which won't affect your credit score.
- Not a Guarantee: It is not a formal mortgage offer. You'll still need to complete a full application for that.
How to Get a Mortgage in Principle
Gather Your Documents
You'll need details of your income, regular outgoings, address history, and proof of identity.
Choose Your Route
You can apply directly with a lender (like a bank) or use a mortgage broker who can search the market for you.
Complete the Application
Fill in the application form online, over the phone, or in person. It usually takes less than an hour.
Information You'll Need
- Proof of income (payslips, accounts)
- Bank statements (usually 3-6 months)
- Details of any existing debts or loans
- Proof of deposit amount
- Address history for the last 3 years
- Photo ID (passport or driving licence)
Direct Lender vs. Mortgage Broker
Direct Lender
Going directly to a bank or building society you know.
Pros:
- May have exclusive deals for existing customers.
- No broker fees.
Cons:
- You only see their products, not the whole market.
- You have to do all the research and application yourself.
Mortgage Broker
An independent expert who compares mortgages from multiple lenders.
Pros:
- Access to a wide range of lenders and deals.
- Expert advice and handles the application for you.
- Can be invaluable for complex situations.
Cons:
- Some brokers may charge a fee for their service.
Frequently Asked Questions
Ready to Start Your Search?
With your Mortgage in Principle, you have a clear budget and can confidently search for your new home. Browse thousands of new build properties today.