Head of Content
Mortgage Advisor & Director
What does mortgage in principle mean?
A mortgage in principle is also known as a decision in principle, an agreement in principle, or, a mortgage promise.
All of these terms refer to the initial statement from a lender indicating that they will lend you a certain amount of money before you've made a formal application. Getting a mortgage in principle can put you in a better position as a buyer. Sellers will take you more seriously, and you'll get a better response from estate agents when it comes to viewings.
It is important to note that this is the first step in the process, and mortgage lenders have every right to change their mind as you continue through the application process.
Is a mortgage in principle guaranteed?
No, having a mortgage in principle does not guarantee that your application will be accepted, or that you will be able to borrow the amount stated. Similarly, it does also not commit you to take out that mortgage and staying with that lender.
A mortgage in principle provides an indication of what lenders may be willing to offer, but the final mortgage offer will depend on lots of other factors.
At the mortgage in principle stage, lenders only perform a soft credit check, whereas later on, they will perform more detailed assessments of your credit history and employment details. The reason for this is to work out how reliable you are as a borrower and assess the risk of you failing to make repayments on your mortgage.
What happens after a mortgage in principle?
Once you've had an offer accepted on a property, you will then make your full mortgage application. This may be with the same lender as your mortgage in principle, but you may decide to apply to a different lender. Your complete mortgage application will go into more detail on your credit history, your income and employment, and of course, the property itself.
Why would a mortgage in principle be declined?
There are several reasons why a mortgage in principle may be declined. A few of the common reasons for rejection are listed below:
- Insufficient income
- Unreliable income
- Recent changes to employment
- Small deposit
- A poor credit history
- Too much spending
- Incomplete application
- Incorrect information on the application
- You have too much debt.
Unfortunately, a rejected mortgage in principle may be detrimental to your credit score. Even if your mortgage in principle is accepted, it does not guarantee that your final mortgage offer will also be accepted. Even if you pass the eligibility and affordability criteria, the lender may decide that they are not willing to lend you the money to buy the property, for example, if it is of non-standard construction.
To maximise your chances of approval, we would recommend engaging an experienced mortgage broker who will be able to tell you which lenders are most likely to accept your application.
How long does the mortgage in principle last?
How long the mortgage in principle lasts will depend on the lender.
Anything between 60 to 90 days is typical; after which point, you may need to get another mortgage in principle if you are still looking to buy a property. Assuming your circumstances haven't changed, renewing or getting another mortgage in principle should be straightforward.
How fast can I get a mortgage in principle?
Getting a mortgage in principle can be very fast. Assuming you have all the information you need, you could get a decision in as little as 24 hours. With Teito, you can apply online in minutes and receive a decision quickly. Get started now, and we promise to make your mortgage journey as stressfree as possible.
Get your mortgage in principle certificate in 5 minutes
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
Last updated 28 February 2024