A Mortgage in Principle (MiP) or Agreement in Principle (AiP) is a way to better understand how much you could borrow prior to making a mortgage application, and you will need one before making an offer. It can also be referred to as a Mortgage Promise or Decision in Principle.
Before applying, you will need:
- Exact details of your income or total combined income if you're buying with someone.
- Notes on outgoings and existing credit arrangements.
- Addresses for the last three years.
Some
key factors:
- It is usually valid from 30 to 90 days (the details of the MiP will make this clear).
- It takes around 15 minutes and you'll get an instant decision.
- It is obligation free.
- It only involves a soft credit check, so won't impact your credit score.
What happens once I get one? Once you have the MiP, it will allow you to view properties with a clearer understanding of your price range. It is not compulsory to have one to view properties, but it shows you are serious about buying. It will also allow you to make an offer sooner, as you
must have one in place before making an offer.
Is It different from a mortgage offer? Yes. A mortgage offer is for a known amount to purchase a known property.
Where can I get one? All mortgage providers can provide a Mortgage in Principle (MiP). You are not committed to actually apply for the mortgage through the provider that gives you an MiP. In my opinion, it is worth doing a quick search on a comparison site (based on your deposit and the figures from what you are likely to be able to afford) and try and get the MiP from the best offer for you based on those initial planning figures. I look at this in more detail in the Complete the Mortgage Application section.
What does it look like? The image below is an example of a Mortgage in Principle that you could receive:
