What Is a Mortgage in Principle?
A Mortgage in Principle (MIP) — also called an Agreement in Principle (AIP) or Decision in Principle (DIP) — is a conditional statement from a mortgage lender or broker indicating the amount they are likely willing to lend you, based on a preliminary review of your finances. All three terms describe the same thing; different lenders simply use different terminology.
It is important to understand what a MIP is not: it is not a formal mortgage offer, not a guarantee of lending, and not legally binding. It is an initial indication that gives you — and more importantly, estate agents and property sellers — confidence that you have the financial backing to proceed with a purchase. Think of it as a "you look good on paper" statement.
- Mortgage in Principle (MIP): Used by many high street banks and building societies
- Agreement in Principle (AIP): Used by many specialist lenders and brokers
- Decision in Principle (DIP): Often used in the broker and online mortgage market
- All three are functionally identical — a preliminary lending assessment
Why You Need a Mortgage in Principle
In the UK property market in 2025, having a mortgage in principle before making an offer is effectively essential for the following reasons:
- Estate agents require it: Most estate agents will ask for a MIP before accepting an offer or agreeing to take a property off the market. Without one, they may show you properties but not progress your offers.
- Signals serious intent to sellers: In competitive markets, sellers receive multiple offers. An offer backed by a MIP demonstrates you have done your homework and are not wasting their time.
- Helps you set a realistic budget: Knowing how much a lender will offer in principle prevents you from falling in love with properties you cannot afford, or limiting yourself unnecessarily.
- Speeds up the process: Having a MIP before making an offer means the formal mortgage application can proceed faster once an offer is accepted, reducing the risk of losing the property to a faster buyer.
- Free and quick to obtain: Most lenders offer online MIP applications that take 10-15 minutes and produce an instant decision. It costs nothing.
Soft Search vs Hard Search: Does a MIP Affect Your Credit Score?
This is one of the most frequently asked questions about mortgage in principles. The answer depends entirely on whether the lender uses a soft or hard credit search.
Soft Search
- Not visible to other lenders
- Does not affect credit score
- You can see it on your own credit report
- Can apply multiple times safely
- Used by: Nationwide, Barclays, Halifax, many online lenders
- Always ask explicitly if soft search is used
Hard Search
- Visible to all lenders for 12 months
- Can slightly reduce credit score
- Multiple searches in short period = red flag to lenders
- Each hard search stays on file for 2 years
- Used by: some specialist lenders, if more detailed check needed
- Avoid applying to multiple lenders with hard searches
The practical advice: always ask the lender or broker before applying whether they will conduct a soft or hard credit search for the MIP. If declined following a hard search, wait at least 3 months before applying elsewhere to allow any negative impact to diminish.
How to Get a Mortgage in Principle: Step-by-Step
What Lenders Check During a Mortgage in Principle
While a MIP is a preliminary check, lenders still assess several key factors to reach their initial decision:
| Factor | What Lenders Look At | Impact |
|---|---|---|
| Income | Basic salary, bonus, commission, self-employment income, rental income, benefits | Determines maximum borrowing via income multiplier |
| Credit Score | Credit history, defaults, CCJs, missed payments, current debt levels | Good score = better rates and higher MIP; poor score = lower offer or decline |
| Deposit Size | Amount you can put down; source may be queried (gifts, savings, sale proceeds) | Determines LTV; higher deposit = better rates |
| Outgoings | Loans, credit cards, car finance, childcare, maintenance payments | Reduces disposable income and therefore maximum borrowing |
| Employment Type | Employed (PAYE), self-employed, contractor, zero-hours | Self-employed and contractors need more evidence; some lenders decline certain types |
| Number of Dependants | Children and other financial dependants | Reduces disposable income in affordability calculations |
| Age | Age at end of proposed mortgage term | Some lenders cap mortgage term at state pension age or 70/75 |
Mortgage in Principle vs Full Mortgage Application
Understanding the difference between a MIP and a full mortgage application helps set realistic expectations:
| Stage | Mortgage in Principle | Full Application |
|---|---|---|
| Timing | Before property search / making offers | After offer accepted on a specific property |
| Speed | Instant to 24 hours | 2-6 weeks typically |
| Documentation | Self-declared information | Payslips, P60, bank statements, full ID |
| Property valuation | Not required | Required — lender instructs surveyor |
| Credit check | Soft (usually) or light hard check | Full hard credit check always |
| Outcome | Conditional indication of borrowing | Binding formal mortgage offer (if successful) |
| Bindingness | Not binding on lender | Formal offer binding once accepted |
| Cost | Free | Arrangement fee (£0-£2,000), valuation fee (£150-£1,500) |
How Much Can You Borrow? Income Multipliers in 2025
UK mortgage lenders use income multipliers to determine the maximum loan amount. The standard range in 2025 is:
| Multiplier | Who It Applies To | Example: £50,000 Income |
|---|---|---|
| 4.0x | Poor credit, high debts, non-standard employment | Max loan: £200,000 |
| 4.5x | Standard — most applicants | Max loan: £225,000 |
| 5.0x | Good credit, larger deposit, professionals | Max loan: £250,000 |
| 5.5x | High earners (£75k+), specialist lenders, first-time buyer schemes | Max loan: £275,000 |
For joint applications, both incomes are combined before the multiplier is applied. The lender then checks affordability (can you afford the monthly payments if rates rise by 3%?) and may reduce the offer if monthly outgoings suggest stress. Since the 2014 Mortgage Market Review, lenders must stress-test all mortgage applications at higher rates.
Information You Need for a Mortgage in Principle Application
- Personal details: Full name, date of birth, current address, and address history for the past 3 years
- Income: Gross annual salary (before tax), any regular bonus or commission, other income sources (rental income, investment income, child benefit, maintenance payments)
- Employment: Employer name, employment type (employed/self-employed/contractor), start date, whether on probation
- Self-employed: Last 2-3 years' SA302 forms and tax year overviews from HMRC; accountant contact details
- Monthly outgoings: Existing loan and credit card minimum payments, car finance, childcare costs, maintenance/alimony, other regular commitments
- Deposit: Total amount available, source of deposit (savings, gift from parents, equity from sale — gift of over £10,000 will require a signed gifted deposit letter)
- Property purchase price range: You do not need a specific property yet — just an intended maximum price
- National Insurance number: Required for identity and credit check purposes
Frequently Asked Questions
What is a mortgage in principle (MIP)?
A mortgage in principle (MIP), also called an Agreement in Principle (AIP) or Decision in Principle (DIP), is a conditional statement from a lender indicating the amount they would likely lend based on a preliminary review of your finances. It is not a formal mortgage offer or guarantee of lending. It is used to show estate agents and sellers that you have the financial backing to proceed with a purchase.
Does a mortgage in principle affect my credit score?
It depends on whether the lender uses a soft or hard credit search. Soft searches do not appear on your credit file visible to other lenders and have no impact on your score. Most MIP applications use soft searches. Hard searches are recorded and visible to other lenders — multiple hard searches in a short period can slightly reduce your score. Always ask whether a soft or hard search will be used before applying.
How long does a mortgage in principle last?
Most MIPs are valid for 60 to 90 days from the date of issue. After this, re-apply — the process is quick and the lender will conduct an updated assessment. Some lenders refresh existing MIPs without requiring a full new application.
Does a mortgage in principle guarantee I will get a mortgage?
No. A MIP is not binding on the lender. The full application requires income verification with payslips/SA302s, a full credit check, property valuation, deposit source confirmation, and complete affordability assessment. Your application can be declined at the full stage even with a valid MIP, particularly if circumstances change or the property valuation comes in below the agreed price.
Do I need a mortgage in principle to make an offer on a house?
You do not legally need one, but most estate agents will ask for a MIP before accepting an offer or taking a property off the market. In competitive markets, offers backed by a MIP are strongly preferred by sellers and agents over those without. It is free and takes only 10-15 minutes to obtain online.
How much can I borrow on a mortgage in principle?
Most UK lenders offer 4 to 4.5 times gross annual income as standard, with some lenders offering 5 or 5.5 times for high earners, professionals, or first-time buyers. For joint applications, both incomes are combined before the multiplier. The actual amount may be lower depending on credit score, existing debts, LTV, and the lender's affordability stress test.
What information do I need for a mortgage in principle?
You will need: full name, date of birth, address history (3 years), employment status and income, monthly debt repayments, deposit amount and source, target purchase price range, and your National Insurance number. Self-employed applicants need their last 2-3 years' SA302 forms. You do not need to have a specific property in mind.
Sources & References
- FCA — Mortgages consumer guidance
- MoneyHelper — Mortgage in principle
- GOV.UK — Mortgage Credit Directive
- UK Finance — Regulated Mortgage Survey 2025
- Bank of England Base Rate: 4.5% (February 2026)
Disclaimer: This guide provides general information and the estimator tool produces indicative figures only. Actual mortgage amounts depend on your full financial circumstances, credit history, and lender criteria. Always consult a qualified, FCA-authorised mortgage adviser before making decisions about mortgage finance.