Subsequently, I provided six important points useful to the policy decision: a mortgage in principle – also known as an agreement in principle (AIP) or decision-in-principle (DIP) – is a written indication from a bank or credit company (the lender) that indicates how much it might be willing to grant you. It`s not binding (they could always deny you a mortgage on these terms), but it`s a very useful indicator of what you can probably borrow, and real estate agents take them seriously. It can also be the property itself that makes you refuse a mortgage.. B for example, if it is listed, has been used for commercial purposes or has recently been affected by declines, which is the gradual fall of the earth that causes the ground to collapse under a house. Use our mortgage calculator to find out how much you could borrow, how much it could cost a month and what your credit-to-value ratio would be. You don`t need to go through the full application process to get an agreement in principle. This will come later if you have accepted an offer on a property. You`ll need all of these for your full mortgage application anyway, so you may think it`s a dress rehearsal. This should be self-evident: make sure all the information is correct, or you may be faced with a refusal.

If you remortgaging, there is less need for this information, so you would file an agreement in principle once you have chosen a lender and a product. If you have had credit problems in the past or have a limited credit history and are not sure what a bank or construction credit union might lend you, an agreement in principle could give you extra security from your credit perspective. A mortgage in principle is not mandatory, but there are several good reasons to make one. An AIP mortgage typically takes up to 90 days and can help speed up the application process for a formal mortgage, as a lender can use the AIP to complete your application. Keep in mind that you don`t need to use the same lender that gave you the AIP when applying for a formal mortgage. The purpose of an IAP is to give you a clearer idea of how much you could afford to borrow.