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What is a Decision in Principle?

A Decision in Principle is an indication from your mortgage lender of how much they may be willing to lend you for your mortgage.

A Decision in Principle is sometimes also referred to as:

  • an Agreement in Principle
  • a Mortgage in Principle
  • a Mortgage Promise

It’s not legally binding and the amount offered could change following a detailed assessment of your income and spending, credit rating and other factors.

A Decision in Principle may involve a soft credit search, but this does not affect your credit rating.

What factors are taken into account when you apply for a Decision in Principle?

Factors that may be considered include:

  • debts, missed payments or arrears 
  • lack of consistency and discrepancies in your file
  • not meeting your lender’s specific criteria

Why do you need a Decision in Principle?

A Decision in Principle makes it easier for you to start ‘shopping’ for a home. You’ll have a clear idea of what your budget is and you can show it to estate agents to prove you’re a serious buyer.

How long does a Decision in Principle last?

This will be decided by your mortgage lender, however they typically last anywhere between 60 to 90 days.

What happens after you receive a Decision in Principle?

Once you’ve found a property you like, you may wish to  make an offer on it up to the maximum value of your Decision in Principle. 

You must then go back to your mortgage lender and make a full mortgage application. If everything is satisfactory, your lender will make you an official mortgage offer.

The official mortgage offer tells you the amount you can borrow from your lender for your chosen property. Your mortgage lender will send a copy of your mortgage offer to your conveyancer.

Why might your mortgage offer differ from your Decision in Principle?

This is typically because of the results of the affordability assessment or mortgage valuation. So, for example, if the value of the property is lower than your Decision in Principle.

How to apply for a Decision in Principle

You can typically get a Decision in Principle on the same day you apply.

Many lenders let you apply online. This makes it easy for you to enter your details and set the terms of the mortgage you want. You can also receive a decision instantly.

The application process will be different for every lender. For example, some lenders may prefer you to complete an application over the phone or in branch.

You may need:

  • proof of income, such as payslips
  • two years’ worth of accounts, if you are self-employed
  • proof of your current address
  • proof of identity, such as a passport or driver’s licence
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