How Long Does a Mortgage in Principle Last?

The mortgage market is currently fast-changing, and it can be frustrating trying to understand when you should apply for a mortgage in principle and what steps to take after you have one. It can feel agonising to decide whether to hold off in the hope that rates will fall, especially as some lenders are adjusting rates quickly.

The good news is that a mortgage in principle is valid for long enough to give you peace of mind, helping you know that you are on track to secure a competitive mortgage rate and make progress on your home-buying goals.

Let’s explore what a mortgage in principle is, how long it lasts, and what you need to know about obtaining one in today’s mortgage market.

What is a Mortgage in Principle?

A mortgage in principle is a provisional mortgage agreement. You can think of it like a provisional driving licence – it allows you to make offers on properties, but you will need to pass your “test” – in this case, a full mortgage application – before buying the house.

A mortgage in principle is a certificate stating that, subject to a full mortgage application, you will be able to borrow money from a specific lender.

Different lenders and brokers may use varying terms for a mortgage in principle. You might see it called a ‘decision in principle’ or an ‘agreement in principle’ instead.

There are also acronyms for these terms, in case your lender or broker likes jargon:

• Mortgage in Principle – MiP
• Decision in Principle – DiP
• Agreement in Principle – AiP

The key thing to remember is that all of these terms are synonymous and used interchangeably by brokers and lenders across the mortgage market.

Difference Between a Mortgage in Principle and a Mortgage Offer

Once you have made an offer on a property using your mortgage in principle, a full mortgage application will need to be submitted.

A full mortgage application is your opportunity to provide proof of income to the lender to confirm your mortgage in principle. For example, if you told the lender you earn £50,000 per year, you will need to provide bank statements, payslips, or Tax Calculations and Tax Year Overviews to reflect this. A whole-of-market broker, like Boon Brokers, can liaise with the lender on your behalf.

If your mortgage application is successful, the lender will issue a mortgage offer. This offer is then passed to your conveyancers, and the property contracts can be signed by both parties in anticipation of exchange and completion.

In short, a mortgage in principle is an early step in the mortgage journey and does **not** guarantee a mortgage offer. Only after a successful full mortgage application will the lender grant a formal mortgage offer.

When Should I Get a Mortgage in Principle?

Most estate agents like to filter out buyers who may not have the means to purchase a property before arranging viewings and accepting offers.

To do this, estate agents normally request a mortgage in principle, or if you are a cash buyer, they may ask for proof of funds.

Because of this, it’s a good idea to have a mortgage in principle ready before you start viewing properties in person.

It’s worth noting that not all estate agents insist on seeing a mortgage in principle, but if you are looking at multiple properties, you may notice differences in how each agent handles viewings.

In rare cases, you might not need a mortgage in principle at all. You could find a property, make an offer, and then proceed directly to a full mortgage application. However, this carries a risk, as you won’t know for certain whether the lender will approve the mortgage until after the full application is submitted.

How Long Does It Last?

Mortgages in principle do not have a universal set time limit. Each lender has different rules regarding how long their mortgage in principle remains valid, so you should check with your broker if you think your property search may take longer than expected.

Typically, most mortgages in principle are valid for around three months. However, most lenders reserve the right to cancel a mortgage in principle at any time. This could happen, for example, if the Bank of England increases the base rate and this changes your affordability calculation.

For instance, if your mortgage in principle was based on your maximum borrowing capacity, a rise in the base rate could mean your projected mortgage payments are now higher, potentially affecting your ability to pass the affordability assessment.

How to Get a Mortgage in Principle?

The best way to obtain a mortgage in principle is through a mortgage broker. Brokers take the time to understand your financial situation and help find the lender that best suits your individual circumstances.

Mortgage brokers will present your options, often showing a handful of lenders, highlighting the pros and cons of each. They can help point you to the cheapest mortgage product or the lender that will allow you to borrow the most. Expert mortgage advice is invaluable, as there are many factors to consider when selecting a mortgage.

Once you have chosen the most suitable lender, your broker can process the mortgage in principle for you and send the certificate via email or post. Some lenders now offer online mortgage in principle systems that automatically expire when the product changes or when the set time limit runs out.

What Do I Need for a Mortgage in Principle?

You will need three basic pieces of information to obtain a mortgage in principle:

• Details about your income
• Details about all your expenditure
• How much you are looking to borrow

Your broker will provide this information to the lender. If the details match the lender’s mortgage requirements, they will then request a credit check.

Most lenders use soft credit checks for mortgages in principle. Soft checks do not impact your credit score. Some lenders may use a hard credit check, and your mortgage broker will advise you which type will be applied.

The credit check is the final step in the mortgage in principle process. If you pass, you will be issued the mortgage in principle certificate.

Speak to a Specialist

Obtaining a mortgage in principle is fairly straightforward, but there is a significant difference between simply getting one and having a mortgage in principle that is tailored to your circumstances and maximises your chances of a successful full mortgage application.

Boon Brokers is a Whole of Market Mortgage, Insurance and Equity Release Brokerage. Boon Brokers provides fee-free mortgage advice.

Contact Boon Brokers to arrange your mortgage in principle today.