A mortgage in principle is one of the first practical steps toward buying a home, and it is often the point at which house-hunting starts to feel real. Also known as an agreement in principle (AIP) or a decision in principle (DIP), it gives you an early indication of how much a lender may be willing to lend you. This guide explains what a mortgage in principle is, why you need one, and how it affects your credit.
What is a mortgage in principle?
A mortgage in principle is a written statement from a lender indicating how much they might lend you, based on some initial information about your income, outgoings and credit history. It is not a guaranteed mortgage offer, and it does not commit you or the lender to anything, but it is a strong signal of what you could afford.
Think of it as a realistic budget confirmed by a lender, rather than a promise. The final offer comes later, once you have found a property and submitted a full application.
Why do you need one?
An agreement in principle is genuinely useful for three reasons:
- It sets your budget. You know the ballpark figure you can borrow before you start viewing, so you focus on homes you can realistically buy.
- Estate agents take you seriously. Many agents ask to see an AIP before they will put your offer forward, because it shows you are a credible buyer.
- It strengthens your offer. In a competitive market, a seller is more likely to accept an offer from someone who has already been assessed by a lender.
Without one, you risk falling for a property outside your budget, or losing out to a better-prepared buyer.
How do you get a mortgage in principle?
Getting an AIP is usually quick — often just minutes to a few hours. You, or your adviser on your behalf, provide details such as:
- Your income and employment status
- Your regular outgoings and existing credit commitments
- The deposit you have available
- Basic personal details for a credit check
The lender runs these through their criteria and returns a figure they may be prepared to lend. Working with a whole-of-market adviser means you can find a lender whose criteria fit your circumstances before you apply, rather than applying blind.
Soft versus hard credit checks
Lenders check your credit as part of an AIP, and there are two types of check:
- A soft search leaves a footprint only you can see and does not affect your credit score. Many lenders use soft searches for an AIP.
- A hard search is visible to other lenders and can have a small, temporary effect on your score. Some lenders use a hard search at the AIP stage.
Before you proceed, it is worth confirming which type of check a lender uses. An adviser can guide you toward lenders that use soft searches at this stage, so you avoid unnecessary hard footprints while you are still comparing options.
Does a mortgage in principle affect your credit score?
If the lender uses a soft search, your credit score is not affected. If they use a hard search, there may be a small, short-lived impact, particularly if you accumulate several hard searches in a short period. One or two is rarely a problem, but making many applications in quick succession can concern lenders.
The sensible approach is to obtain one AIP from a well-matched lender, rather than applying to several at once.
How long does a mortgage in principle last?
An agreement in principle typically lasts between 30 and 90 days, depending on the lender. If it expires before you have found a home, it can usually be renewed, though your circumstances and the lender's criteria may have changed in the meantime.
From AIP to full mortgage offer
An AIP is only the beginning. Once your offer on a property is accepted, you submit a full mortgage application, and the lender carries out a detailed assessment along with a valuation of the property. Only then do you receive a formal mortgage offer.
Because an AIP is based on limited information, it is not a guarantee. Being honest and accurate at this stage helps ensure the full application runs smoothly.
How Wisely can help
At Wisely, your named adviser can arrange an agreement in principle with a lender whose criteria suit you, using a soft search wherever possible to protect your credit file. As an independent, whole-of-market adviser with access to 120+ lenders, we help you start your search from a position of strength.
Big decisions, made wisely. To get your mortgage in principle underway with no obligation, book a free call on 023 8268 1111.
This guide is general information, not personal financial advice. Your home may be repossessed if you do not keep up repayments on your mortgage.
Frequently asked questions
Is a mortgage in principle a guarantee?
No, an agreement in principle is an indication of what a lender may lend, not a firm offer. The formal offer comes after a full application and property valuation, so acceptance is never guaranteed at the AIP stage.
How long does a mortgage in principle take to get?
It is usually very quick, often just minutes to a few hours, once you have provided your income, outgoings and deposit details. Your adviser can arrange one on your behalf and match you to a suitable lender.
Will a mortgage in principle hurt my credit score?
It depends on the lender. Those using a soft search leave no mark on your score, while a hard search can have a small, temporary effect, so it is worth checking which type a lender uses before proceeding.
How many mortgages in principle should I get?
Generally just one, from a lender well matched to your circumstances. Making multiple applications in a short space of time, especially those using hard searches, can concern future lenders.