Mortgage Decision in Principle

If you are planning to purchase a property, one of the first things to arrange is a mortgage decision in principle. This gives you an idea of how much you may be able to borrow and helps show sellers that you are a serious buyer. Here, we explain what a decision in principle is, whether you need one, how it works, and what steps to take if your application is declined.

What is a mortgage decision in principle?

A mortgage decision in principle, often shortened to DIP and sometimes referred to as an agreement in principle (AIP) or mortgage in principle (MIP), is an early indication from a lender of how much they may be prepared to lend based on some basic details.

It is not a formal mortgage offer, but it does show that the lender has completed an initial affordability check using information such as your income, credit history, and any obvious financial commitments.

Estate agents will often ask buyers for a decision in principle before accepting an offer on a property, as it helps show that a lender has already carried out some early checks and that you are on the right track to securing a mortgage.

Do you always need one?

A mortgage decision in principle is not a legal requirement when applying for a mortgage, but in reality it is often expected during the property purchase process.

Many estate agents prefer buyers to have a decision in principle in place before viewing properties or making an offer. This can give sellers greater confidence that you are in a position to obtain a mortgage.

Having a decision in principle can also give you a better understanding of how much you may be able to borrow, allowing you to focus your property search on a realistic price range from the outset.

How to get a mortgage decision in principle

Getting a mortgage decision in principle is usually a straightforward process and can often be completed online or through a mortgage broker in just a few minutes.

Lenders will normally ask for some basic information about your finances and personal circumstances, including:

Your income and employment – You will usually need to provide details of your basic salary and employer. It is also helpful to have information about any additional income, such as bonuses, benefits, pensions, or investment income.

Monthly outgoings and debts – You should be ready to give an outline of your regular spending, including costs such as rent, travel or commuting expenses, credit card repayments, loans, childcare, and school fees.

Estimated deposit – You may not need to prove the amount at this stage, but it is important to have a realistic estimate of your deposit and a clear understanding of where it is coming from.

Your credit profile – Many lenders will carry out a soft credit search, although some may use a hard credit search, to review any existing bad credit issues.

Personal information – You will normally need to provide identification, your UK address history, your National Insurance number, and other basic personal details, depending on the lender.

Why use a mortgage broker for a decision in principle?

It is possible to get a mortgage decision in principle directly from some lenders, but not every lender offers this route. As each lender has its own criteria, it is important to approach one that suits your circumstances.

For that reason, arranging a mortgage decision in principle through a broker is often more effective, as they can search across the wider market rather than limiting you to a single lender.

Using a mortgage broker at this stage can also help make sure the most suitable lender is identified before any credit searches are carried out, reducing the risk of unnecessary declines or avoidable marks on your credit file.

What to do if your mortgage decision in principle is declined

If your mortgage decision in principle is declined, it is important not to make multiple applications straight away, either with the same lender or with several different lenders. A number of credit searches within a short period can have a negative effect on your credit profile and may reduce your chances of being approved.

Instead, it is usually better to speak to an experienced mortgage broker who can identify why the decision in principle was declined and match you with lenders whose criteria are more suitable for your circumstances.

Decision referral

In some cases, an application may be referred rather than declined outright.

This means the lender’s automated system was unable to make an instant decision and the application will need to be reviewed manually by an underwriter. Referral times can vary, but an experienced broker may be able to provide extra information or supporting documents to strengthen your application.

Do all mortgage lenders offer decisions in principle?

Most UK mortgage lenders will provide some form of decision in principle or agreement in principle, although the process and criteria can vary.

Certain lenders offer instant online decisions, while others rely more heavily on broker submissions or manual underwriting.

Here are examples of well-known lenders and their general approach towards an online mortgage decision in principle:

Frequently Asked Questions