Decision in Principle - an indication from a mortgage lender to loan you the money

A Decision in Principle serves as an indication from a mortgage lender regarding their potential ability to extend a mortgage offer to you. This involves a "soft" credit check to assess your credit history and is alternatively referred to as a Mortgage in Principle or Agreement in Principle.

How a Decision in Principle Operates:

To obtain a Decision in Principle, it is necessary to provide relevant information to the lender. This includes details about your income, job, expenditures (such as childcare, rent, or existing mortgages), credit or loans you may have, and your previous addresses over the past few years.

Benefits of Obtaining a Decision in Principle:

A Decision in Principle is instrumental when embarking on the house-hunting process. It provides clarity on the upper limit of your budget, instilling confidence in securing a mortgage. Additionally, it signals to sellers that you are a committed and serious buyer.

Furthermore, if you intend to switch your existing mortgage to a new lender, a Decision in Principle is essential.

Timing and Validity:

Obtain a Decision in Principle when you are ready to commence the search for your new home or if you are contemplating switching your existing mortgage to a different lender. Typically, a Decision in Principle remains valid for 30 to 90 days, contingent on the stability of your financial situation. It is advisable to confirm the specific duration with your lender, as rules may vary.

Multiple Decision in Principles:

It is possible to secure Decision in Principles from various lenders. This provides you with a range of options when applying for a mortgage.

Credit Score Implications:

Most lenders conduct a 'soft' credit check for a Decision in Principle, focusing on income and expenditures without impacting your credit score. However, some lenders perform a 'hard' credit check, which may have a temporary impact on your credit score. Always verify with each lender whether they conduct a 'soft' or 'hard' credit search during the Decision in Principle application process.

Cooper Adams recommend all buyers to have a Decision in Principle before their first viewing. We can organise the best one for you for free. Please call us on 01903 791 727