A Decision in Principle (DIP) is sometimes also referred to as:
A Decision in Principle makes it easier for you to start looking for a property to purchase:
This varies between lenders; however, they typically last anywhere between 60 to 90 days.
If the Decision In Principle expires before you need to use you can reapply, but you must be careful to not apply too often as it’s possible that this may impact your credit score.
There are 2 ways to apply for a Decision in principle
It’s generally advised to use a mortgage broker, since they will have access to a greater range of mortgage than you can find on the high street or online. Whereas going direct to a lender will only give you access to a limited range of products. Plus if you go direct to a lender and don’t fit the criteria, you won’t necessarily be accepted at all.
An experienced independent, whole-of-market broker, will already know which lenders are likely to accept you, as well as being able to offer you the best deals from providers across the whole market.
You can also save time this way, as your broker can find you the best potential mortgage deal straight away to save you searching around once you’ve had your offer accepted.
Once you have found a property you want and have had your offer accepted, then the next step is to make a full Mortgage Application. If you have used a broker to get your Decision in Principle then they will be able to re-use the information you have already given them to form the basis of your full Application. If everything is satisfactory, your lender will make you an official mortgage offer.
There are 2 main reasons for a potential difference in the amount a lender is willing to offer from a full application compared to a Decision in Principle
A DIP is a non-binding indication of how much a bank is willing to lend you for a mortgage. A Full Application will involve more detailed checks and likely require you to provide more information and proof of things such as your income etc.
However, the main difference is that an Application is the only way to receive an actual Mortgage Offer.
If you have any further questions or need to start the process of getting a free decision in principle, then the next best step is to contact a Whole of Market Mortgage Broker.
They will be able to answer any questions you still have, and arrange a decision in principle for you from a major high street lender if you require one. Alternatively, you may find you are ready to proceed to a full mortgage application.