What is a Mortgage in Principle?

A Mortgage in Principle (MIP), also known as an Agreement in Principle (AIP) or a Decision in Principle (DIP), is a statement from a lender indicating how much they might be willing to lend you based on an initial assessment of your financial situation. It’s not a guarantee, but it gives you a clearer idea of what you could afford when house hunting.

How does it work?

To get a Mortgage in Principle, you’ll need to provide some financial information to a lender, such as your income, outgoings, and credit history. The lender will then perform a credit check to assess your financial reliability. Based on this information, they’ll give you an indication of how much they would be willing to lend you subject to a formal mortgage application being submitted.

Why is a Mortgage in Principle Beneficial for First-Time Buyers?

1. Clarity on Budget: Knowing how much you can borrow helps you focus your property search on homes within your budget, saving you time and preventing disappointment.
2. Seller Confidence: Sellers are more likely to take your offer seriously if you have a Mortgage in Principle. It shows that you’re a committed buyer and that a lender has already indicated they’re willing to fund your purchase.
3. Speed Up the Buying Process: With a Mortgage in Principle, you’re one step ahead. Once you’ve found a property, you can move quickly to the full mortgage application, which can be appealing to sellers who are looking for a swift transaction.
4. Identify Credit Issues Early: If there are any problems with your credit history, a Mortgage in Principle will identify these, giving you time to address any issues or look for lenders who are willing to work with your specific circumstances.

How to Get a Mortgage in Principle:

You can obtain a Mortgage in Principle by speaking with a mortgage adviser. They will guide you through the process of obtaining a MIP, which typically involves providing details about your finances and consenting to a credit check. A MIP is usually valid for 60 to 90 days. Remember, while a mortgage in principle is a helpful first step, it’s important to read the fine print and understand that it’s not a formal mortgage offer.

In conclusion, a Mortgage in Principle is a valuable asset for individuals looking to buy their first or next home. It provides clarity, credibility, and confidence in the home-buying journey. By securing one early in your search, you position yourself as a serious contender in what can be a competitive property market, making your path to homeownership smoother and more straightforward.

Talk to us today to discuss your financial circumstances and get the ball rolling with your Mortgage in Principle.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Approved by The Openwork Partnership on 07.06.24

The Mortgage Society is a trading name of Just Mortgages Direct Limited which is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited, which is authorised and regulated by the Financial Conduct Authority.