How Reliable is a Mortgage In Principle?

by Kate Stratton

Last Updated 28th September 2023

6 Minute Read

Embarking on the journey to homeownership can be both exciting and daunting. One of the first steps you may encounter is obtaining a Mortgage In Principle (also known as a Decision in Principle). But just how reliable is a Mortgage in Principle?

In this article

In this post, we’ll dive into the world of MiP and explore its purpose, benefits, and factors that can affect its reliability. Get ready to become an informed homebuyer and navigate the mortgage process with confidence – let’s dive in!

Key Takeaways

  • A Mortgage In Principle gives an estimate of how much a lender is likely to lend you.
  • Applying for one can help you find and purchase your ideal home faster.
  • Factors such as financial circumstances, credit history, and lender criteria affect the reliability of a Mortgage In Principle.

Understanding a Mortgage In Principle

A Mortgage In Principle, also known as a mortgage promise, serves as a helpful indicator of how much a mortgage lender might be willing to lend you. It’s not set in stone, but it can at least give you a ballpark figure of what you can afford before you dive headfirst into the sea of actual mortgages.

To obtain an agreement in principle, lenders will assess your financial situation, including your income, expenses, and their own specific criteria. You’ll need to provide essential information such as income details, spending records, credit agreements, and previous addresses.

Why apply for a mortgage in principle?

Obtaining one can expedite your home purchasing process and showcase your seriousness as a buyer to estate agents and sellers. It offers a clear indication of the amount you can likely borrow, which helps you in the following ways:

  • Narrow down your property search to homes within your budget
  • Save time by focusing on properties that you can afford
  • Demonstrate your financial readiness to sellers and estate agents

If you find yourself declined for a mortgage in principle, it provides you with an opportunity to work on improving your credit report before reapplying, saving you potential disappointment down the line.

Mortgage In Principle vs Mortgage Offer

An image showing a couple having a discussion and a document with the text 'Mortgage in Principle' and a stamp that reads 'Reliable', representing the question of how reliable is a mortgage in principle.

Keep in mind, a Mortgage In Principle does not constitute a legally binding offer. It merely serves as an indication of how much a mortgage provider might be willing to lend you, with credit reference agencies playing a role in determining your creditworthiness.

On the other hand, a mortgage offer is a binding agreement from a lender to lend you a specific amount of money. The critical difference between the two is that a mortgage offer is a legally binding mortgage agreement, while an MiP is not.

If you get declined after receiving a Mortgage In Principle, the reason for the rejection will be as visible as a neon sign to other mortgage lenders, including the same lender if you decide to brave the waters and reapply. It’s like having a “No Entry” sign on your credit report – eek!

Factors Affecting Mortgage In Principle Reliability

The reliability of a Mortgage In Principle can be influenced by various factors, such as changes in your financial situation, credit history, and the lender’s specific criteria. These factors can have a principle affect on the outcome of your mortgage application.

Let’s dive into each of these factors.

Financial Circumstances

Changes in your job, income, or credit can impact the reliability of your Mortgage In Principle. Some factors that can affect the reliability of a Mortgage In Principle include:

  • Inadequate income
  • Perceived unreliable income
  • A small deposit
  • Recent or frequent job changes
  • Inaccurate information provided by the applicant

Moreover, taking out a new line of credit can also affect MiP reliability by impacting your affordability and making lenders apprehensive about potential borrowing that exceeds your means.

Credit History and Credit Rating

Credit history plays a significant role in the reliability of a Mortgage In Principle. The higher your credit score, the more reliable you appear to lenders, while a lower credit score might raise doubts about your ability to repay the loan.

Missing monthly payments and being in debt can also affect the reliability of a Mortgage In Principle by raising concerns about your financial stability.

Lender’s Specific Criteria

Lenders may have undisclosed criteria that can influence the reliability of a Mortgage In Principle. These hidden criteria might include factors such as credit utilization ratio, marital status, and employment status. Meeting the lender’s eligibility requirements is vital, as it demonstrates your ability to repay the loan.

Furthermore, the lender’s decision heavily relies on the accuracy and completeness of the information you provide.

Credit Checks and Mortgage In Principle

A person couple looking through their documents for credit checks and mortgage in principle with a mortgage broker

Most lenders perform a soft credit check or enquiry search when assessing a Mortgage In Principle, which does not affect your credit rating. However, multiple hard searches in a short period can negatively impact your credit rating, as they can signify potential money problems or risky borrowing behavior – this will be recorded on your credit report.

Being aware of which lenders carry out a hard credit check is important, as it may influence your ability to secure a mortgage. It’s essential to be aware of the credit check process (and understand the difference who offers a soft credit check) when applying for a mortgage. But don’t worry, this is something we can help with.

Renewing or Updating a Mortgage In Principle

A Mortgage In Principle typically lasts for 60-90 days before expiring. If your circumstances change or your MiP expires, you may need to renew or update it.

If it expires, don’t panic! A straightforward renewal will allow you, a serious buyer, to continue your homebuying journey.

Tips for Improving Mortgage In Principle Reliability

To improve the reliability of your Mortgage In Principle, focus on enhancing your credit score, maintaining financial stability, and being honest in your applications.

A higher credit score and stable financial situation will make you appear more reliable to lenders, increasing your chances of obtaining a favorable mortgage deal. Moreover, honesty in your mortgage application is paramount to circumvent potential rejections because of discrepancies or missing information.

How to Proceed After Receiving a Mortgage In Principle

A couple celebrating and deciding how to proceed after receiving a mortgage in principle with a mortgage broker

Once you’ve secured a Mortgage In Principle, the next step is to proceed with a full mortgage application. You’ll need to gather all necessary documents, such as proof of income, proof of address, and any other information required by the lender.

Once you’ve submitted your complete mortgage application, all you need to do is wait for the official mortgage offer. Upon receiving the mortgage offer, accept it and proceed with the legal formalities to complete your homebuying journey.


Wrapping things up, a Mortgage In Principle is like your golden ticket to the homeownership journey. It’s not a legally binding contract, but it’s a sign that you’re serious about buying and gives a ballpark figure of what you might be able to borrow. Just remember, it’s not set in stone, and factors like your financial situation, credit history, and the lender’s criteria can influence it. But don’t let that scare you! With a bit of knowledge and preparation, you can improve your chances of securing a great mortgage deal. So, ready to tackle the world of mortgages with a helping hand? Get in touch and let’s turn that dream home into a reality together.

Frequently Asked Questions

What is a Mortgage In Principle?

A Mortgage In Principle is an estimate from a lender of how much they might be willing to lend, based on your financial situation. It’s not guaranteed though and may change depending on further assessment.

Are mortgages in principle accurate?

Mortgages in principle are not necessarily accurate, and there could be differences when you actually apply for the mortgage. It’s important to remember that it’s not a guarantee of an offer.

How likely are you to get a mortgage with a mortgage in principle?

Having a mortgage in principle can give you an indication that your mortgage application is likely to be approved, but it’s not a guarantee. Make sure you provide all the necessary information and documents to give yourself the best chance of success.

Can a mortgage still be declined?

Yes, a mortgage can be declined even after a MiP has been agreed upon due to various reasons.

How long does a Mortgage In Principle last?

A Mortgage In Principle typically lasts for 60-90 days, so it’s important to act quickly when applying.

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