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What is a Mortgage In Principle?

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A mortgage in principle (MIP), or mortgage agreement in principle, gives would-be homebuyers a good idea of what they could borrow to buy a home. It’s not a guarantee that you’ll be able to borrow that amount but gives a good indication of how much you can afford. It’s an essential first step.

It also proves to sellers that you’re committed, as you can demonstrate you’re getting organised and entering the mortgage application process.

How to get a mortgage in principle (MIP)

Our recommended mortgage advisers have a unique MIP that you can get online. It checks your credit history and eligibility with 18 lenders to accurately calculate how much you can borrow for a home. You can get your instant mortgage in principle below:

Mortgage in Principle

Getting one allows you to see what size mortgage you could borrow.

It sometimes falls under specific names from certain lenders, such as ‘Mortgage Promise’.

What is a mortgage in principle based on?

The loan amount you’re entitled to will be based on a range of factors, these typically include:

  • Income 
  • Employment status 
  • Credit rating
  • Credit history 

It’s always recommended you check your credit report and get a credit report before speaking to a mortgage broker. You can get a mortgage with bad credit, but it will be trickier.

Check Your Credit Score

When should you get one?

It’s recommended you get an agreement in principle before you start house hunting. That way, you can attend viewings knowing how much you can afford, rather than wasting time looking at those out of your price range. 

In the words of our founder Phil Spencer, ‘you don’t go shopping unless you know what you’ve got to spend’!

Getting an agreement in principle can also help you stand out from other buyers, which can be particularly useful for a property with lots of interest around it. This is because it will prove to the seller you can afford the property you’re looking at. 

Mortgage in Principle

Why should you get one?

An agreement in principle is by no means compulsory, however, there are further benefits to getting one, including:

  1. Reduces the chance of you applying for a too-big loan and getting your mortgage application declined
  2. Some estate agents will only take you seriously if you have one. Some lenders will give you a certificate you can show
  3. Can improve your chances of getting a mortgage
  4. Gives you a clear idea of what you can afford
  5. Sets you apart from your competition – and less prepared homebuyers
  6. Can give you greater negotiating power when discussing price
  7. Can save time; potentially speeding up the mortgage application process once you have had your offer accepted 
  8. Gives you confidence knowing what you can really afford
  9. Enables you to focus and take house hunting seriously
  10. Shows you are a committed homebuyer by showing you are taking all the important steps at the right time. 
Mortgage in Principle

How long does a mortgage in principle last?

An agreement usually lasts between 60 and 90 days. So, if you haven’t found a property (or had an offer accepted) in that time, you might need to get another.

If anything changes relating to the details you provided when you made your original application (e.g. employment status), you’ll need to check that the agreement is still valid.

Why not just apply for a mortgage? 

Securing a mortgage in principle is a much quicker process than applying for a mortgage. This will allow you to confidently view properties. 

Also, the mortgage deal you’re offered will depend on the property itself. For example, lenders will need to carry out a valuation survey; a basic inspection on the property that determines its value. For this to be done, you’ll need to have found a home you’d like to buy. 

Mortgage Quotes

Things to bear in mind about getting a mortgage in principle

The advantages of getting an agreement in principle tend to outweigh the disadvantages. However, there are a few inevitable drawbacks to be aware of. 

Requires a credit search

Getting a mortgage agreement will require a credit check, in the form of either a hard or soft search. 

The latter simply checks your credit file without leaving a ‘footprint’ and won’t be visible to other lenders, so shouldn’t affect your credit rating. 

A hard search will show on your file. This alone isn’t necessarily detrimental, however, if a lot of hard searches are made in a short space of time, a future lender may think you’ve been rejected. This could make them less likely to lend to you. Different lenders do different searches, be sure to find out.

Check Your Credit Score

It’s not confirmation of a mortgage

It’s important to be aware that with an agreement in principle, there are no guarantees. Getting one doesn’t confirm that your mortgage application is approved.

You’ll need to complete a full application and the lender checks your earnings and credit history and also reviews your circumstances before deciding if you’re eligible.

How do I get a mortgage in principle?

You can start online

Mortgage in Principle

Or you can speak to a mortgage adviser who will help through each important step. Our recommended mortgage adviser offers fee-free advice in 24 hours and a decision on your mortgage in 5 days. Or they will pay you £100!

Mortgage Quotes

You may have to pay an early repayment charge if you remortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage. Terms and conditions apply to the mortgage decision promise.

Last Updated: April 7th, 2022