A Beginner’s Guide to Mortgage in Principle: How It Works and Why You Need One

For anyone stepping onto the property ladder for the first time, one of the earliest pieces of advice you’ll hear is to secure a Mortgage in Principle. Sometimes called an Agreement in Principle (AIP) or Decision in Principle (DIP). This short document plays a surprisingly powerful role in the home buying process.

But what exactly is it, why does it matter and how does it affect your ability to buy a home? Here is a clear, practical breakdown of everything you need to know.

Understanding the basics

A Mortgage in Principle is a written indication from a lender stating how much they are likely to let you borrow.

It’s not a full mortgage offer and does not legally bind the lender or the buyer, but it provides an early assessment of your affordability based on the information you provide.

The lender typically checks your income, debts, credit history and deposit size, then issues a figure representing the amount they’d consider lending if you later make a full application.

Think of it as a financial green light. It shows you and the developer that you are a serious, credible buyer with the backing of a lender.

Why a Mortgage in Principle Matters

One of the biggest challenges for first time buyers is understanding what they can realistically afford. While online calculators give rough estimates, a Mortgage in Principle is far more reliable because the lender actually assesses your situation.

Estate agents and sellers take buyers more seriously when they present an AIP. In competitive markets, having one can even give you an advantage over other buyers because it signals that you have the financial capacity to proceed quickly.

Some estate agents won’t allow you to book viewings or won’t accept an offer, unless you have a Mortgage in Principle already in hand.

It also helps you house hunt with confidence. Instead of guessing your budget, you know exactly which properties fall within your borrowing range. This prevents disappointment and wasted time and helps ensure that the offers you make are realistic and achievable.

What Information Does the Lender Check?

Although the process is simpler than a full mortgage application, lenders still gather key details before issuing a Mortgage in Principle. These typically include:

• Employment status and income
• Regular expenses and debts, such as loans or credit cards
• Your deposit amount and savings
• Your credit history, using either a soft or hard check
• Basic personal details, such as address history

Most lenders use this information to get a broad picture of your financial stability. If everything appears reasonable, they produce the AIP, often within minutes of receiving your information.

Does It Affect Your Credit Score?

This depends on the lender. Some perform a soft credit check, which does not impact your credit score and is not visible to other lenders. Others will perform a hard credit check, which can leave a temporary mark on your score.

A single hard check is generally harmless, but multiple checks in a short period may have a small negative effect. If you are concerned about this, you can ask the lender which type of check they use before proceeding.

A Mortgage in Principle is a lender’s initial assessment of how much you could borrow, helping first time buyers budget and make credible offers before a full mortgage application.

What a Mortgage in Principle Doesn’t Do

Although an AIP is incredibly useful, it’s important to understand its limitations. It does not guarantee that the lender will offer you a mortgage later.

During the full application, they will take a deeper look at your financial documents, review bank statements and conduct a property valuation. If anything changes your income, debts, credit score or the condition of the property the final mortgage offer may change accordingly.

How Long Does a Mortgage in Principle Last?

Most AIPs are valid for 60 to 90 days. If yours expires before you find a home, renewing it is usually straightforward. You may need to update a few details, but the process is much quicker the second time around.

How to Get One

You can obtain a Mortgage in Principle from:

• Banks and mortgage lenders
• Mortgage brokers, who can compare deals across multiple lenders
• Online mortgage platforms, which issue instant AIPs

The best choice depends on whether you want access to the full market (brokers), convenience (online services) or a direct relationship with your bank.