What Is a Mortgage in Principle and Why Do You Need One?

Understanding a Mortgage in Principle in the UK

Buying a home in the UK can feel overwhelming especially for first-time buyers. One term you’ll hear often is "mortgage in principle" also known as an agreement in principle (AIP) or a decision in principle (DIP) . But what exactly is a mortgage in principle and why do you need one when house hunting?

Let’s break it down in simple terms.

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What Is a Mortgage in Principle?

A mortgage in principle is a statement from a lender saying how much they might be willing to lend you for a mortgage based on a quick assessment of your income expenses and credit history .

It’s not a binding mortgage offer but it gives you an estimate of how much you could borrow. Think of it as a pre-approval —a useful indication of your borrowing power.

Key points:

• It’s usually valid for 60–90 days .

• It’s based on basic financial information.

• It can help you show estate agents and sellers that you're a serious buyer .

Why Do You Need a Mortgage in Principle?

Having a mortgage in principle offers several advantages:

Shows You’re a Serious Buyer
Estate agents and sellers prefer working with buyers who have an AIP. It proves you’ve taken steps towards securing a mortgage.

Gives You a Clear Budget
Knowing how much you can borrow helps you focus your property search on homes you can realistically afford.

Speeds Up the Process
When you find your dream home having a mortgage in principle can make your offer more attractive and streamline the mortgage application process.

Helps You Plan Your Finances
An AIP gives you a rough idea of your maximum mortgage amount which helps you budget for your deposit stamp duty solicitor fees and other costs .

How to Get a Mortgage in Principle

Getting a mortgage in principle is usually quick and straightforward. Here’s how to do it:

Provide basic financial details – Your income outgoings deposit amount and credit commitments.
Credit check – Some lenders do a soft credit search (does not affect your credit score) while others may do a hard search (may leave a footprint on your credit file).
Receive your AIP – Most lenders will issue an AIP within minutes to a few hours.

Does a Mortgage in Principle Guarantee a Mortgage Offer?

No. A mortgage in principle is not a guarantee . It’s based on limited information and your final mortgage offer will depend on a full application with detailed checks including:

• Income verification (payslips bank statements)

• Full credit history review

• Property valuation

• Additional checks by the lender

That’s why it’s important to not overstretch your budget based on an AIP alone.

Will Getting a Mortgage in Principle Affect My Credit Score?

It depends on the lender:

• Soft search AIP – No impact on your credit score.

• Hard search AIP – May slightly affect your credit score.

If you're shopping around for an AIP ask the lender what type of search they’ll perform.

When Should You Get a Mortgage in Principle?

It’s best to get a mortgage in principle before you start viewing properties . This way you:

• Know your budget upfront.

• Can make a stronger offer when you find the right property.

• Avoid delays when you're ready to buy.

Key Benefits of a Mortgage in Principle

Helps you understand how much you can afford .
Makes you a more attractive buyer to sellers.
Speeds up the mortgage application process .
Boosts confidence when house hunting.

Next Steps: Calculate Your Affordability

Before getting an AIP it’s helpful to estimate your borrowing capacity. Try our free Mortgage Affordability Calculator to see how much you could borrow based on your income expenses and deposit.

Final Thoughts: Why a Mortgage in Principle Matters

A mortgage in principle is a key step in the UK home-buying journey. It shows estate agents and sellers that you’re a serious buyer helps you set a realistic budget and can make your offer more appealing.

It’s not a mortgage guarantee but it’s a vital part of the process especially for first-time buyers navigating the competitive UK property market.