What Is a Decision in Principle and Why Does It Matter?
If you are in the early stages of buying a property, you will almost certainly come across the term “decision in principle.” It is one of the first practical steps in the mortgage process and something our team at Akers Pritchett walks every client through from the very start. Understanding what it is and why it matters can give you a significant advantage, particularly in a competitive property market.
What Is a Decision in Principle?
A decision in principle (also known as an agreement in principle or mortgage in principle) is a written statement from a lender confirming that, based on an initial assessment of your finances, they would in principle be willing to lend you a certain amount. It is not a formal mortgage offer and does not guarantee a mortgage will be approved, but it is an important early indicator that you meet a lender’s basic criteria.
To issue a decision in principle, a lender will typically carry out a soft or hard credit check and review some basic information about your income and outgoings. The process is usually quick and can often be completed within a matter of hours.
Why Does It Matter When Buying a Property?
For first-time buyers and home movers alike, having a decision in principle in place before you start viewing properties puts you in a much stronger position. Estate agents and sellers take buyers with a decision in principle more seriously, as it demonstrates that you have taken the first steps towards securing finance and are not simply browsing.
In situations where multiple buyers are interested in the same property, being able to show a decision in principle can genuinely make the difference between having an offer accepted or not. It shows you are a credible, prepared buyer who is ready to proceed.
What Is the Difference Between a Decision in Principle and a Full Mortgage Offer?
A decision in principle is based on a limited amount of information provided at the outset. The lender has not yet seen your payslips, bank statements, or the details of the property. A full mortgage offer comes later in the process, once you have found a property and submitted a complete application with all supporting documents. The lender will then carry out a full credit assessment and arrange a valuation of the property before issuing a formal offer.
It is important to understand that a decision in principle does not lock you in to a particular lender. You are free to review the full market before submitting a formal application.
Does a Decision in Principle Affect Your Credit Score?
This depends on whether the lender carries out a soft or hard credit search. A soft search does not leave a visible mark on your credit file and will not affect your score. A hard search does leave a footprint, so it is worth clarifying which type a lender will carry out before proceeding. Our advisors will guide you on this when helping you obtain a decision in principle.
How We Can Help
At Akers Pritchett, obtaining a decision in principle is one of the first things we do when working with a new client. We identify the most suitable lender for your circumstances, help you gather the information needed, and submit on your behalf. This means you are properly prepared before you begin your property search.
Whether you are buying for the first time, moving home, or exploring your options, get in touch with our team for a free, no-obligation conversation. We serve buyers across Nottingham, Derby, and Leicester.
Frequently Asked Questions
How long does a decision in principle last?
Most decisions in principle are valid for between 60 and 90 days, after which they will need to be renewed if you have not yet found a property. If your circumstances change during that period, such as a change in income or employment, it is important to let your advisor know, as this could affect the outcome of your full application.
Does having a decision in principle guarantee I will get a mortgage?
No, it does not. A decision in principle is an initial indication based on limited information. Your full application will involve a more thorough assessment, including a detailed review of your supporting documents and a valuation of the property. However, if your circumstances have not changed since the decision in principle was issued, and the property valuation is satisfactory, the full offer should follow in most cases. Our advisors prepare applications carefully to minimise the risk of any surprises at this stage.
Can I get a decision in principle before I have found a property?
Yes, and we recommend it. Getting a decision in principle before you begin viewing properties means you know exactly what you can afford and can move quickly once you find the right home. It also strengthens your position with estate agents from the very first viewing. Speak to our team at the start of your search rather than waiting until you have found a property.
Your home may be repossessed if you do not keep up repayments on your mortgage.