What is a Mortgage in Principle?

A Mortgage in Principle, also known as a Agreement in Principle (AIP) or a Decision in Principle (DIP), is a statement from a lender indicating that they would, in principle, be willing to lend you a certain sum of money to purchase a property.

This does not act as a guarantee, but it gives you as a homebuyer a clear indication of what you could potentially borrow based on your income, debts, and credit score when officially applying for your mortgage.

Why is this useful?

A crucial first step

Knowing how much you could potentially borrow helps to set a realistic budget when house hunting.

It is useful to have this before enquiring into a property to avoid wasting both yours and the sellers’ time, in the event the property exceeds your budget.

Credibility with sellers

A Mortgage in Principle can help demonstrate to sellers that you are a serious buyer with potential financial backing, making your offer more attractive.

This can also make you more credible compared to other potential buyers without a Mortgage in Principle.

Getting ahead of the game

Having a Mortgage in Principle can speed up the full mortgage application process as the lender will already hold some of your details.

A proactive approach

This document can highlight any potential issues in your credit history early in the property purchasing process. This allows you time to address them before you find a property you want to buy so as not to get in the way of securing your dream home.

Peace of mind

It provides assurance about how much money you will require within your budget when looking at the bigger picture. It allows you to budget for other costs associated with purchasing a property such as solicitors, stamp duty, and general moving expenses.

How long is the document valid for?

A Mortgage in Principle is typically valid for 60-90 days. However, this can vary between lenders, so it’s important to check the specific validity period with your mortgage provider.

In conclusion, obtaining a Mortgage in Principle is a vital first step for all those looking to buy their first or next home, talk to us today to discuss your options and get your property purchase journey moving!

Contact us

📞 (+44) 0203 987 4811

📩 hello@finakerfinance.co.uk

📍4th Floor, Silverstream House, 45 Fitzroy Street, London, W1T 6EB

Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Finaker Finance Limited (FRN 1014318) is an Appointed Representative of Richdale Brokers & Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority (FRN 769876). Finaker Finance Limited is a company registered in England and Wales (Company Number 10103625) with its registered office at 43 Hideaway Work Space, 1 Empire Mews, London SW16 2BF