Decision in Principle (DIP)

A decision in principle or DIP for short, is a certificate or statement that gives you an indication of how much you can borrow. These are also known as an agreement in principle (AIP), a mortgage promise or a mortgage in principle.

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Why get a decision in principle?

Getting a decision in principle basically shows both you and estate agents a clear budget amount when you begin property hunting. Many estate agents insist on you presenting a decision in principle as it proves you’re a serious buyer.

How long does a decision in principle last for?
Ultimately this is dependent on your mortgage lender, but typically a decision in principle can last between 60 – 90 days.

Will a decision in principle affect my credit score?
Fortunately, applying for a decision in principle will not affect your credit score. Unlike a full mortgage application, a decision in principle utilises a soft credit check, which doesn’t affect your credit score due to only requiring certain details from credit reference agencies.

Benefits of getting a decision in principle (DIP)

Clarifies Budget

Provides a clear understanding of how much you can borrow, helping you set a realistic budget for your property search.

Strengthens Offers

Demonstrates to sellers and estate agents that you are a serious buyer with mortgage pre-approval, potentially giving you an edge in negotiations.

Saves Time

Streamlines the homebuying process by narrowing your search to properties within your approved borrowing limit, saving time and effort.

Identifies Issues Early

Highlights any potential issues with your credit history or financial situation that may need to be addressed before applying for a full mortgage.

Boosts Confidence

Provides peace of mind and confidence to proceed with your property search, knowing you have preliminary mortgage approval.

Shows Financial Readiness

Indicates to all parties involved, including real estate agents and sellers, that you are financially prepared to proceed with the purchase.

Reduces Uncertainty

Minimizes the risk of delays or surprises during the final mortgage approval process by addressing key financial criteria upfront.

Helps with Financial Planning

Assists in better financial planning and decision-making by providing a clear picture of your borrowing capacity and potential monthly payments.

Increases Credibility

Enhances your credibility as a buyer, especially in competitive markets, by proving that you have taken proactive steps to secure financing.

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