A mortgage in principle (MIP) – also known as an agreement in principle (AIP) or decision in principle (DIP) – is well worth getting before you start viewing homes for sale. But it’s crucial to be aware of how long a mortgage in principle lasts as there’s a limited period in which it’s valid.
While a mortgage in principle isn’t essential when you’re buying a house, because it shows what you could afford to borrow on a mortgage, it is advisable to apply for one. Once you have it, estate agents and sellers know you’re a serious buyer who can afford the property you want to make an offer on.
Apply for a mortgage in principle and it’s vital to know how long it might last, and what you can do if it runs out before you’ve found the home you want to buy and we asked the experts to provide the knowhow you need.
Why apply for a mortgage in principle?
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Obtaining a mortgage in principle is recommended so that the offer you make when you’ve found a home you’d like to buy is taken seriously.
Applying for a mortgage in principle requires you to supply details like your name, address and date of birth along with financial information, including income, outgoings and any credit agreements such as credit cards or for car finance.
Once you have assembled the details you need, the application can be made speedily and the response should also be quick. However, you should be aware that an MIP has a limited life.
How long does a mortgage in principle last?
A mortgage in principle lasts for a set amount of time.
“Technically speaking, the decision in principle is only valid for a second once you’ve clicked submit and get your DIP response,” says Mark Harris, chief executive of mortgage broker SPF Private Clients. “Should the lender who you did the DIP with change policy, then the DIP is invalid – the lender won’t stand by the DIP result.
“However, more realistically, the DIP typically has a validity period which varies between 30 to 90 days,” he explains.
The variation is between different lenders. “All lenders have their own rules, so it’s worth speaking to them or your broker for guidance,” advises Paul Blaking, mortgage sales manager at Suffolk Building Society.
Mark Harris
Mark is chief executive of SPF Private Clients, an award-winning financial services intermediary, and was part of the launch team of the company as Savills Private Finance in May 1997. Originally launching as the financial services arm of Savills, SPF has rapidly grown into one of the market leaders in UK financial services. SPF became part of the Howden Group of companies in 2022.
Paul Blaking
With an extensive background in financial services, Paul Blaking has worked for over 12 years at Suffolk Building Society and is the society’s direct mortgages manager.
What if the agreement in principle expires before you’ve found a house?
If you haven’t found the right house before the expiration of the agreement in principle, renewal is a possibility.
“Depending on the lender, you may be able to extend a decision in principle if it expires,” says Paul Blaking.
“Usually this is straightforward if none of your circumstances have changed. It will simply involve the lender running another credit search. If your circumstances have changed, however, you’ll have to re-apply for a mortgage in principle,” he adds.
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Can you have more than one agreement in principle?
You are not limited to just one agreement in principle when you’re searching for a house to buy.
“If you’re shopping around for the best mortgage rate you may have a mortgage in principle from more than one provider at the same time,” says Paul Blaking.
But be aware of the potential impact of applying for more than one. “It’s important to note, that while most lenders will offer a ‘soft’ credit search for a mortgage in principle, some will complete a ‘hard’ search,” Paul explains. “Hard searches will be visible to other potential credit companies. Multiple hard searches can have a negative impact on your credit record.”
You can do some investigation, though. “The lender’s website FAQs might tell you which type of search they’ll do,” says Paul.
Remember that a mortgage in principle is not a guarantee
Always keep in mind that a mortgage in principle does not make getting a mortgage offer a certainty.
“While a DIP is useful in demonstrating to an estate agent and a seller that you have started the process of obtaining a mortgage, it is not a guarantee of a mortgage offer,” says Mark Harris. “The lender will use the information as part of the full underwrite once a full application is submitted.
“When a full mortgage application is submitted, a hard search would be run.”
You can apply for a mortgage in principle from a bank or building society or through a broker. Using a broker can give you access to a larger range of mortgages and help you find the best deal around.
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