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What is a mortgage in principle?

A mortgage in principle – also known as a decision in principle or an agreement in principle – is a certificate from your prospective mortgage lender that will provide you with an approximate idea of the size of mortgage you would qualify for. Because a mortgage in principle can leave an imprint on your credit record, it’s best not to get more agreements in principle than you need in order to make a decision on which mortgage to choose. Instead, you could narrow down your initial search first, using our FREE online mortgage calculator to help you find the best mortgage deals for you.This tool allows you to compare over 5,000 mortgage deals with no obligation and select the lenders that you want to approach for a mortgage in principle.

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Why obtain a mortgage agreement in principle?

Having a mortgage in principle can be useful because it gives you the flexibility to find the right property for you, while also having a good idea of what you will realistically be able to afford to buy based on the amount that the mortgage provider may be willing to lend you.  It is up to you whether you accept the mortgage deal or not within this time frame, and there is no obligation on you as a buyer to follow through with a full mortgage application. Do remember, however, that any formal mortgage offer you do make will still be subject to the mortgage lender’s own affordability testing and credit checks – a mortgage decision in principle is not a guarantee or promise on the part of the lender and they are free to withdraw it at any time or offer you a mortgage on alternative terms if your circumstances change.

How do I obtain a mortgage decision in principle?

 In order to obtain a decision in principle for getting a mortgage, you will need to approach your chosen lender, who will ask you to provide information such as your personal details and proof of identification, employment, income, and credit information. The lender can then use this information to give you an idea of how much they might be prepared to lend you. As part of the process of obtaining a decision in principle, mortgage lenders will normally conduct a credit check or score, and as these checks can appear on your credit record it’s a good idea not to obtain more agreements in principle than necessary. 

Will getting a mortgage decision in principle affect my credit history?

It’s wise not to approach too many lenders for an agreement in principle because, as previously mentioned, it could adversely affect your credit rating. However, on balance it makes sense to obtain a minimum of one agreement in principle as it can be helpful to have one to take with you when viewing properties. A mortgage decision in principle can give you an edge of authority as a prospective buyer – it gives you evidence to show the seller and the estate agent that you are in a realistic position to buy the property and are not wasting their time.

How long is a mortgage decision in principle valid for?

Once you have obtained an initial mortgage agreement in principle, you will usually have a set time in which to decide on whether you want to take up the deal that you have been offered or not. The length of time that a mortgage agreement in principle is valid for will vary from lender to lender, but it is usually likely to be around six months.

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To compare top mortgage interest rates and find the best mortgage deals for you, use the mortgage calculator to search over 5,000 mortgage deals based on your personal circumstances.