What is a Decision in Principle (DIP)?

A Decision in Principle is the first stepping stone to getting a mortgage. It’ll give you a good indication of the maximum amount that your mortgage lender could lend you to buy a home.

The advantages of getting a ‘Decision in Principle’ are that you’ll be able to search for properties in the appropriate price bracket and show estate agents and sellers that you’re serious about making an offer and, in theory, can afford to buy the property you are interested in.

Depending on the lender, a DIP can also be called a Mortgage Promise, Mortgage in Principle or an Agreement in Principle (AIP).  

So how do you get a DIP?

As with a full mortgage offer, you can either apply for a DIP through a mortgage adviser or direct with a lender. At M&S Bank we can go through the DIP process during a phone appointment. The call takes around 30-40 mins and you’ll need to provide some personal information about yourself, your income and your outgoings. We will then do some credit checks, collate all the information together and provide you with a decision amount that we might be able to lend to you (based on the information you have provided and subject to a number of conditions).

Important things to remember…

  • A DIP isn’t a guarantee of securing a mortgage at the end of the day. A lender may choose not to lend for a number of reasons. Their decision is based on their own specific underwriting processes and checks, as well as looking at your credit history, circumstances, suitability and, of course, the property offered as security.
  • Online calculators are not the same as a DIP – they will give you a general idea about how much you may be able to borrow, however they do not take into account as many factors as a DIP application.
  • After you have completed a DIP, decided on the property you wish to purchase, made an offer to the sellers and had it accepted, you’ll be ready to move to the next stage – completing a ‘full mortgage application’. At this stage, you’ll need to provide evidence that proves your income and outgoings.
  • At M&S Bank, we’ll do a ‘soft’ credit check when providing a Decision in Principle. This means that we’ll look at information held about you at the credit reference agencies that we use but we won’t leave a trace of our search, as too many searches over a short period of time could affect your credit rating.
  • However, full applications with any lender will normally leave a ‘hard footprint’. We will tell you just before the credit check takes place so you can decide if you want to proceed.

A favourable buyer

Having a budget in mind gives you the green light to look for a property. But your DIP certificate could set you apart from other buyers. It gives you the ability to make a more confident offer and reassures the vendors or sellers about accepting your offer.

Why not call us today on 0800 923 1536 to arrange a DIP appointment or for more information? Lines are open 8am-8pm Monday to Friday and 9am-1pm Saturday (excluding bank holidays). Calls may be recorded for security, training and monitoring purposes.

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The material contained in this article is intended for information purposes only and not as advice.

You should obtain professional legal or other advice if you are unsure about the effect on you of any matter in this article.

Published: 26 January 2018

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