When thinking about getting a mortgage, it’s a great idea to start with a Mortgage in Principle (or MIP). You might have heard this referred to by other names, like a Decision in Principle (DIP), Agreement in Principle (AIP) or Mortgage Promise, but they all mean the same thing. Here’s why you should consider getting a Mortgage in Principle and how it could give you an edge as a home-buyer.
What is a Mortgage in Principle?
A Mortgage in Principle is an official estimate of how much you could borrow. It’s not a formal mortgage offer or a guarantee that you’ll be able to get a mortgage for that amount, so you’ll still need to complete a full mortgage application later on and be assessed against the lender’s own set of criteria. However, having a Mortgage in Principle is a great way to position yourself as a savvy buyer – it can reassure sellers and estate agents that you’ve done your research and can afford the property you want to buy. 🏠
How do I get a Mortgage in Principle?
You can get a Mortgage in Principle from a lender or a mortgage broker. With Moneybox Mortgage Advice, you can do this for free in less than five minutes. Just head in-app to Accounts > Mortgages to get started. 📲
When filling out the form, you’ll be asked to give a few key details, such as your deposit amount, income and any regular outgoings (like loans or credit repayments). If you’re applying for a joint mortgage with another person, you’ll need to include your combined income and outgoings.
How long does a Mortgage in Principle last?
Unlike a formal mortgage offer, a Mortgage in Principle usually doesn’t expire. However, it’s a snapshot based on the details you provided at the time and the mortgage deals that were available then. If your circumstances change, for example, you get a pay rise or save more as a deposit, you should update your details for a more accurate estimate. Also, if it’s been a long time since you first completed your Mortgage in Principle, make sure to update your details so you can see the newest deals on the market. ⌛
Will getting a Mortgage in Principle affect my credit score?
Getting a Mortgage in Principle will usually only lead to a “soft” credit search. This is a basic check of your credit history and won’t impact your credit score. Lenders will generally only run a “hard” search on your credit history when you come to submit your full mortgage application. Hard searches leave a note on your credit report to let other lenders know that you’ve applied for a form of credit and whether you’ve been successful. 🔎
What happens after I get a Mortgage in Principle?
Your next step after getting a Mortgage in Principle is to speak to a mortgage adviser to double check your affordability and find the right mortgage for you. It’s best to do this before you make an offer on a property, so you know exactly what you can afford and avoid any disappointment. When you do come to make an offer, your Mortgage in Principle will be a valuable tool, so make sure to tell the estate agent and seller you have one as it might give you an edge! 🌟
Moneybox Mortgage Advice is provided by Moneybox Mortgages Ltd.
Your home may be repossessed if you do not keep up repayments on your mortgage.