What is a Mortgage in Principle?
A mortgage in principle (MIP) — also called an agreement in principle (AIP) or decision in principle (DIP) — is a written or digital statement from a mortgage lender indicating how much they would be prepared to lend you, based on a preliminary review of your income, spending and credit profile.
It tells you — and estate agents and sellers — that a lender has reviewed your basic situation and is likely to lend you up to a certain amount, subject to completing a full mortgage application, full credit checks, income verification and a valuation of the specific property you want to buy.
A mortgage in principle is not a guarantee of a mortgage. It is a strong indication, but the lender can still decline your full application or offer a lower amount once they review everything in detail.
Other Names for a MIP
The same thing is called different names by different lenders and brokers:
- Agreement in Principle (AIP) — used by most major banks
- Decision in Principle (DIP) — also widely used
- Mortgage in Principle (MIP) — generic term used in guides and by some brokers
- Approval in Principle — occasionally used by some lenders
- Conditional approval — less common in the UK
These all refer to the same thing. When an estate agent says "do you have an AIP?", they mean a mortgage in principle.
Why Do Estate Agents Ask for One?
Estate agents ask for a mortgage in principle before accepting an offer — or before arranging viewings in competitive markets — for two main reasons:
- Proof of ability to buy: An AIP demonstrates you have been checked by a lender and are likely able to afford the purchase. Without one, an agent has no evidence you can proceed.
- Protecting the seller: An offer from a buyer without an AIP carries more risk. Sellers want confidence that the buyer can actually get a mortgage on the property.
In a competitive market (particularly for popular properties with multiple interested buyers), not having an AIP can mean losing a property to another buyer who does have one. Getting a mortgage in principle before you start seriously viewing properties is strongly advisable.
Estate agents are also legally required under the Consumer Protection from Unfair Trading Regulations to not misrepresent the status of a buyer — asking for an AIP is part of their due diligence.
Hard vs Soft Credit Check
When you apply for a mortgage in principle, the lender will run a credit check. There are two types:
| Type | Impact on credit score | Visible to other lenders? | Common for MIP? |
|---|---|---|---|
| Soft search | No impact | No — only visible to you | Yes — most lenders now offer soft-search AIPs |
| Hard search | Slight reduction; visible for 12 months | Yes — other lenders can see it | Some lenders still use hard searches for AIPs |
Always ask whether the AIP involves a hard or soft credit check before proceeding. Most major lenders — including Nationwide, Halifax, HSBC and Barclays — now offer soft-search AIPs that have no impact on your credit score.
Multiple hard searches in a short period can lower your credit score and signal to lenders that you are seeking credit from many sources, which can reduce your chances of approval. If you use a broker, they can usually get a soft-search AIP from multiple lenders without a hard footprint.
What You Need to Apply
The information needed for a mortgage in principle is simpler than a full application. Typically you need:
- Proof of identity: name, date of birth, National Insurance number or passport number
- Address history: addresses for the last 3 years
- Income: annual salary (employed) or average profit (self-employed); other income such as bonuses, overtime, benefits, pension
- Co-applicant income: if buying jointly
- Outgoings: monthly credit commitments — credit cards, loans, car finance, other mortgages
- Deposit: the amount available and (broadly) where it comes from
You do not need to have a specific property in mind. The AIP is based on you as a borrower, not on a particular property.
At the full application stage, you will need to provide documentary evidence of everything — payslips, bank statements, SA302s (self-employed), P60s — but not at the AIP stage.
How to Apply
There are two main routes to a mortgage in principle:
Direct from a lender
You can apply online directly through most major banks and building societies in 15–30 minutes. The lender runs a credit check, assesses your inputs and issues an AIP certificate instantly or within a few hours. This is free.
The limitation is that you are only assessed by one lender. If they decline or offer a lower amount than you hoped, you would need to approach another lender — potentially accumulating hard searches.
Through a mortgage broker
A mortgage broker searches across multiple lenders (whole-of-market brokers can access hundreds of products) and identifies the best deal for your circumstances. A good broker will run a soft search first to assess your credit profile and identify lenders most likely to approve you, before submitting a formal AIP.
Most brokers charge a fee (typically £500–£1,500) or receive commission from the lender. Fee-free brokers earn commission only. Using a broker is often worth it for first-time buyers who are unfamiliar with the mortgage market.
How Long Does a Mortgage in Principle Last?
Most AIPs are valid for 60–90 days. After this, it expires and will need to be renewed. Renewing is usually quick — the lender re-runs the credit check and confirms the amount.
Important: if your financial circumstances change between the AIP and the full application — you change jobs, take out a new credit card, have a larger overdraft, or your income drops — the lender may reassess and potentially offer a lower amount or decline.
While your AIP is active: Avoid applying for new credit, taking out loans, changing jobs if possible, or making large unexplained purchases. Any of these could reduce what the lender is willing to offer at full application stage.
MIP vs Formal Mortgage Offer
| Mortgage in Principle | Formal Mortgage Offer | |
|---|---|---|
| Based on | Self-declared information + credit check | Full documentation + property valuation |
| Binding? | No — lender can withdraw or revise | Yes — binding on lender for 3–6 months |
| Property needed? | No | Yes — valuation required |
| Timing | Before house hunting | After offer accepted on a specific property |
| Purpose | Show ability to buy; know your budget | Legal mortgage commitment used by solicitors |
| Speed | Minutes to hours | 1–4 weeks typically |
What If You Are Declined?
Being declined for a mortgage in principle is disappointing but not the end of the road. Steps to take:
- Check your credit report — obtain a free report from Experian, Equifax or TransUnion. Look for errors (wrong addresses, fraudulent accounts, missed payments that should have been cleared) and dispute them.
- Reduce existing debt — paying down credit card balances or closing unused accounts can improve your credit utilisation ratio.
- Wait for adverse markers to age — missed payments and defaults remain on your file for 6 years from the date they were recorded. Older adverse credit has less impact.
- Use a broker — specialist adverse credit brokers have access to lenders who will consider applications that high street banks decline, including those with CCJs, debt management plans or limited credit history.
- Build your deposit — a larger deposit (lower LTV) significantly improves your chances of approval and the rates available.
One declined AIP should not significantly damage your credit score if it was a soft search. If it was a hard search, avoid making multiple further applications in quick succession.
What Happens After the MIP?
Once you have your AIP and find a property you want to buy, the process continues:
- Make an offer. Present your AIP to the estate agent when making an offer. This demonstrates you are a credible buyer ready to proceed.
- Offer accepted. Once the seller accepts your offer, instruct a solicitor and begin the full mortgage application with your chosen lender.
- Full mortgage application. Submit all documentation — payslips, bank statements, ID, proof of deposit. The lender instructs a valuation on the property.
- Mortgage offer issued. If the application and valuation are satisfactory, the lender issues a formal mortgage offer. This typically takes 2–4 weeks from full application.
- Exchange of contracts. Your solicitor exchanges contracts — you are legally bound to complete from this point. Buildings insurance should be in place from exchange.
- Completion. The mortgage funds are released, SDLT is paid, and the property is yours.
Check What You Can Afford
Use our mortgage affordability calculator to estimate how much you could borrow before applying for an AIP.
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