Getting a mortgage in principle

If you’re hoping to buy a house, it’s worth getting a mortgage agreement in principle. It gives you a good idea of how much you can afford to buy a house.

Some estate agents won't even let you view a house unless you show them a mortgage in principle.

What is a mortgage in principle?

A mortgage in principle (MIP) tells you how much you can potentially afford to borrow to buy a property. It's also sometimes known as an ‘agreement in principle’ (AIP), or a ‘decision in principle’ (DIP).

As the name suggests, it’s ‘in principle’, meaning that the offer the lender makes you isn't final. Once you’ve made an offer on a house and it's been accepted, you still need to apply for a mortgage.

You can get a mortgage in principle if you’re a home mover, a first-time buyer, or if you’re remortgaging.

How do I get a mortgage in principle?

You can get a mortgage in principle from a broker, bank, or lender.

To get a mortgage in principle, the details you'll need to provide are:

• Your name
• Date of birth
• Details of at least 3 months of income and any bonuses
• Your outgoings
• Any debt from credit cards, finances or loans
• Address history from the past 3 years

The lender will base the figure you can borrow by looking at this information and considering your credit history.

We've partnered with Mojo Mortgages, an online broker, who can get a mortgage in principle sorted for you.

When should I get a mortgage in principle?

You should get your mortgage in principle before you start looking for a house.

Getting a mortgage in principle should take anywhere from less than an hour to a few days, at most.

By having an idea of what you can borrow, you know what property value to aim for when beginning your search.

How long does a mortgage in principle last?

It depends on the lender, but a mortgage in principle typically lasts for up to 90 days.

If house hunting takes longer than expected and your MIP has expired, you just need to reapply.

How guaranteed is a mortgage in principle?

It's important to note that a mortgage in principle isn’t a final mortgage offer. You could be turned down at the time of application if you don’t meet your lender’s borrowing criteria.

A change in your personal circumstances may affect the lender's decision, such as:

• You no longer have a steady income
• You've made too many credit applications
• You've regularly missed your bill payments
• You've recently spent large amounts on money on items you can't afford
• You're unable to prove some of the claims you've made, such as length of self-employement acocunts

Can I get a mortgage in principle if I have a bad credit history?

You should still be able to get a mortgage agreement in principle if your credit history isn’t great. Although, your credit history might impact the amount you can borrow and the rate of interest you pay.

This is because the lender is likely to see you as a riskier borrower, so you could be borrowing less with a higher interest rate. This should be reflected in the mortgage agreement in principle.

Depending on the lender and the level of bad credit you have, a lender may decide not to lend to you if:

• You’ve been bankrupt in the last 6 years
• You’ve had a court judgement for a debt you haven’t repaid for 6 years
• You’ve had a home repossessed in the last 6 years
• You’ve been refused a mortgage in the last 6 years.

Some lenders also look at your unemployment history too.

If you think you may have trouble applying, our bad credit mortgages page might be able to help.