Also known as a Decision in Principal, a mortgage promise or an agreement in principal, a mortgage in principal is a statement from your mortgage lender stating the amount they’re willing to lend you – subject to final checks, which can be of huge help while house hunting or discussing home improvement with a builder. This isn’t a definite offer and is only a guideline as to how much the company lending you the money will let you borrow.
It’s important to be aware:
- Some lenders view their mortgages in principle as time-sensitive, meaning you will usually have a few months to apply for an official mortgage.
- The deals can also change in this time period so double check you’re getting the best rate.
- A mortgage in principal isn’t a definite offer or an official contract and you will be subject to a full credit check.