What is a mortgage in principle?

A mortgage in principle, also known as an ‘agreement in principle’ (AIP), ‘decision in principle’ or ‘mortgage agreement in principle’, is an indication that a lender could lend you a specified amount, based on details you’ve provided about your income, spending and debts. 

You should be able to get a mortgage in principle for free. With our partners at L&C, you can get a personalised Decision in Principle in just a matter of minutes. And unlike some other lenders, getting a Decision in Principle from L&C won’t impact your credit score. There’s no obligation to proceed with the deal they find you, but it gives you a good indication of how much you can borrow.

Arrange an Mortgage Decision in Principle today with the mortgage experts at L&C

How to get your Decision in Principle in less than 15 minutes

Getting a Decision in Principle is simple. The easiest way to get one is via L&C’s online mortgage finder. They will search over 80 lenders’ criteria and check which deals you could qualify for, how much you may be able to borrow and how much it might cost. Here’s how to do it:

1. Complete your answers on L&C’s online mortgage finder and hit ‘Get Certificate’
2. L&C will email you your Decision in Principle certificate
3. Then, before you make an offer on a property, speak to L&C and they’ll confirm the best mortgage for you.

Not only will this save you time compared to going from bank to bank, unlike many lenders, L&C’s online Decision in Principle doesn’t require a credit check so it won’t harm your credit score. Plus, unlike many brokers, L&C are fee-free so their mortgage service won’t cost you a penny.

What happens after you have a mortgage decision in principle?

You can now view and make an offer on a property, confident you have proof of funds. Once you’ve found the property you want to buy and had an offer accepted, contact your broker if you used one or go to the lender directly to start the formal mortgage application process.

The seller’s estate agent may suggest you use a mortgage broker recommended by them. But there are lots of reasons why this is a bad idea, not least that you might not get the best deal. Find out more in our guide on Do I have to use an estate agent’s mortgage advisor?

It can typically take from two to four weeks to get a mortgage approved. But it can take longer, depending on your circumstances.

Looking for a mortgage or agreement in principle? Speak to our fee free mortgage advisors at L&C or use our online mortgage finder service today

When should you get an AIP?

It’s a good idea to have a mortgage agreement in principle (AIP) before you seriously begin house-hunting and before making an offer on a property.

Why do I need an agreement in principle? 

Having a mortgage agreement in principle (AIP) can help speed up the home-buying process, as you will have an indication of how much you can borrow. Having evidence of this also makes you a more appealing buyer. It will give a seller and their estate agent confidence that you’re serious about the purchase. 

A mortgage in principle is also useful for borrowers who are worried about meeting a lender’s eligibility criteria. Going through the initial checks early will give a sense of whether you’re likely to be accepted or not. If you’re rejected, it gives you the chance to reassess your financial situation before you start house hunting.

Do you need a mortgage in principle to make an offer?

No, a mortgage in principle is not required to make an offer on a house. However, having one can make you a more attractive buyer as it shows sellers that you’re financially capable of purchasing their property.

Plus, it’s advisable to speak to a broker about your finances before you start house-hunting so this is part of that process.

Note that in Scotland, a mortgage in principle is needed for an offer to be taken seriously.

What do I need for a mortgage agreement in principle? 

To get a mortgage in principle, you’ll need to supply various details about yourself and anyone else you’re buying a property with. These include:  

• Personal details, including your name and date of birth 
• Addresses for the past three years 
• Details of your income and monthly outgoings. 

Does an agreement in principle affect my credit score?

This depends. If you get your Decision in Principle from our partners at L&C, they won’t run a credit check so it won’t impact your credit score.

However, some lenders will conduct a ‘hard’ credit check when you apply for a mortgage in principle – and too many credit checks in a short period of time can harm your credit rating.

Protecting your credit rating is essential when you’re applying for a mortgage. So you need to be careful that you don’t do anything to lower your credit score, although one or two hard searches shouldn’t have an impact. And many lenders will run a ‘soft’ credit search. This is a credit check that doesn’t leave a record in your credit report. So if a lender is going to run a credit check, make sure you know which one it will be.

Looking for a mortgage or agreement in principle? Speak to our fee free mortgage advisors at L&C or use our online mortgage finder service today

Can I get a mortgage in principle online?

Yes! By using L&C’s online mortgage finder, it will search over 80 lenders’ criteria and check which deals you could qualify for, the amount may be able to borrow and how much it might cost. You’ll get your Decision in Principle certificate in a matter of minutes.

However, you don’t have to get your mortgage in principle online. If you prefer to speak to someone over the phone, you can call L&C free from a landline or mobile on 0800 073 2326 to speak to an expert adviser who will be able to help you.

How long does an Agreement in Principle last for?

An Agreement in Principle typically lasts for 30-90 days. If you don’t find a property within this time, you may be able to renew it. Or you may need to apply for a new Agreement in Principle.

Is an AIP different to a mortgage calculator?

Yes. A mortgage calculator is a great way to get a quick idea of how much you may be able to borrow, but it’s not as personalised. Your AIP is also a formal document that you can use when you’re considering on making an offer for a property.

What if I don’t pass eligibility checks?

If your first decision in principle is refused, it doesn’t mean you can’t get a mortgage with another lender. But, it is important to understand why you didn’t meet the eligibility criteria. Ideally, you would resolve these issues before you try again. Being in the strongest financial position increases your chances of securing the most competitive mortgages.

The best course of action is to speak to a mortgage broker who should be able to help. They know which lenders are most likely to accept you, and may be able to steer you towards an acceptance.

Your rejection may be down to a poor credit rating. If this is the case, see our guide on Mortgages for Bad Credit to understand your options.

How reliable is a mortgage in principle?

A mortgage in principle does not guarantee that your application for a mortgage will be accepted. Nor does it make any guarantees about the amount that you can borrow. That’s because the initial checks are limited and the lender doesn’t have a full view of your financial situation. Furthermore, the lender needs to make sure that your circumstances haven’t changed since the initial conversation.

This benefits buyers too as it doesn’t commit you to taking out a mortgage with the lender offering the agreement in principle. You still have the option of investigating mortgage options further, if you wish to.

Explore all your mortgage options. Speak to our fee free mortgage advisors at L&C or use our online mortgage finder service today.

Can I get more than one AIP?

Yes, you can have multiple Agreement in Principles. Having an AIP with NatWest doesn’t stop you getting another from a different lender. However, the quickest way to search multiple different lenders is to use a broker like L&C’s online mortgage finder which will give you a Decision in Principle certificate in minutes. And bear in mind some lenders will perform a hard credit check when you apply for a mortgage agreement in principle – it’s advisable to limit the number of this type of search in the run up to applying for a mortgage as it can damage your credit score.

Mortgage declined after agreement in principle: What next?

If your mortgage application is declined after you’ve had an agreement in principle, go straight back to your mortgage broker to discuss your options. And you’ll find more information in our guide Mortgage declined? Here’s what to do next.

Can you get a mortgage agreement in principle when you’re a first-time buyer? 

Yes, if you’re a first-time buyer, estate agents will often encourage you to get a mortgage in principle because it reassures everyone that you’re able to buy.