What is a mortgage-in-principle?

Nuts About Money Logo

A mortgage in principle (also known as an ‘agreement in principle,’ a ‘decision in principle’ and a ‘mortgage promise’) is an official document from a mortgage lender that confirms they think you’d get approved for a mortgage based on what they know about you so far.

Normally, getting a mortgage in principle is the first step in the process of buying a house (although you don’t technically need one to get a mortgage). This is because...

  1. It helps you to avoid rejection: Getting rejected for a mortgage can make it harder to get a mortgage in the future. A mortgage in principle will give you a good idea of whether you’re likely to get approved or not, so you can avoid applying for mortgages you won’t be able to get.
  1. It helps you budget: A mortgage in principle will show you how much a lender thinks they’ll be willing to let you borrow. That means you can search for properties you actually stand a chance of affording.
  1. It’ll please estate agents: Some estate agents and sellers won’t accept an offer you make on a property unless they can see your mortgage in principle first. Sometimes, they won’t even let you view properties without one!

A mortgage in principle normally lasts between 60 and 90 days. Once you’ve had an offer accepted on a property, you can simply apply to turn your mortgage in principle into a full mortgage offer.

Nuts About Money tip

Use an independent mortgage broker to get your mortgage in principle. Not only will they get you the best deal, but they’ll also keep your details saved. Then, once you’ve had an offer accepted on a property, all you have to do is ask them to go ahead with the full mortgage application for you.

Need more help?

Related search terms