What is a Mortgage Decision in Principle & Why Do London Buyers Need One? 

When buying a home, you will likely need a mortgage to fund some of the cost of your new property. Before you even start viewing houses and flats, it is wise to have a realistic idea of the size of mortgage you can afford. 

To establish your price range, it is a good idea to get a mortgage in principle to get an accurate picture of how much you can borrow. Not to mention, while you can view a house without a mortgage in principle, most estate agents expect you to have one. 

It’s also worth considering that a high proportion of central London homes are sold to cash buyers. If you are planning to buy a property in Marylebone, Mayfair, St Johns Wood or Primrose Hill, you may not be considered a serious buyer without a mortgage in principle in place. 

There are more details to consider, however. Read on to find out, what exactly is a mortgage in principle? 

What Is A Mortgage In Principle? 

A mortgage agreement in principle is a conditional offer from your lender of how much you could borrow. It is also known as an agreement in principle (AIP) or a decision in principle (DIP). The offer will be based on your current earnings and your available deposit. 

It is possible to use online mortgage calculators to get an idea of how much you can borrow. However, these can only give you a rough ballpark figure. A mortgage in principle provides you with a much more accurate idea of how much your chosen bank will lend you and is taken seriously by estate agents and sellers. 

The difference between a mortgage decision in principle and mortgage offer 

A mortgage decision in principle provides a reliable estimate of your borrowing potential. You are likely to get a mortgage after agreement in principle, but it is possible to have a mortgage in principle then be declined. When a lender gives you a firm mortgage offer, they are committing to lend for a certain property you intend to purchase. 

Why Do I Need A Mortgage In Principle? 

Applying for a mortgage in principle is much quicker and easier than applying for an actual mortgage. Typically, it can be done in under an hour. Here are a few advantages to getting one done: 

• A decision in principle gives you a clear idea of what you can afford, so you can start looking at homes for sale within that price range. 
• Estate agents and sellers will take any offers you make seriously. 
• It reduces the risk of your actual mortgage application being rejected. 

How Do I Get A Mortgage In Principle? 

When searching for a mortgage, you can approach banks yourself or use a mortgage broker. 

If you use a mortgage broker, they can access a range of mortgages to find the best deal for you. If you are dealing with banks or building societies, contact your chosen lender to express interest in taking out a mortgage. Their advisors will take you through the application process. 

You will need to provide the following information: 

• Proof of your income (e.g. payslips or accounts if you are self-employed) 
• Records of your spending 
• Details of any loans and credit cards you have 
• The amount you have available for a deposit 
• Your address(es) for the previous three years 

Can I Apply For More Than One Mortgage In Principle? 

It’s possible to apply for multiple mortgages in principle, but find out the full implications from your prospective lenders first. Before applying, you need to ask ‘how does a mortgage in principle affect my credit rating?’, and ensure that no hard checks are being performed. 

Will Applying For A Mortgage In Principle Affect My Credit Score? 

Some mortgage lenders will perform a ‘hard’ credit check as part of your application. This will leave a mark on your credit record and affect your credit score. Several credit applications made in a short period can damage your credit rating, so we recommend applying through just one or two lenders. 

Many lenders will only run a soft credit check which won’t impact your credit rating. Ask your broker or mortgage lender if you are concerned. 

Want to know more?  Read about our first time buyer guide for Central London, discover capital gains tax when selling a property and explore our guide to staging your home to sell in Central London.

What Is A Mortgage In Principle Based On? 

When a lender issues a mortgage in principle, they base it on your affordability and eligibility. They assess the following: 

• Your salary, including bonuses. 
• Outgoings such as loan and credit card repayments, childcare costs and living costs. 
• Your credit score (usually using a soft credit check). 
• Your deposit amount and loan-to-value. 
• Employment stability. 
• Any financial reserves in savings accounts. 

It is worth noting that for 2026, many lenders now factor in your rental payment history, which can be a significant boost for first time buyers in areas like Marylebone and St Johns Wood.

While the assessments are not as comprehensive as the detailed checks that will be performed when issuing an official mortgage offer, a mortgage in principle can help to provide a realistic budget range. However, it is not a mortgage promise and you may find that when you apply for a mortgage, more thorough checks might result in a lower mortgage offer. 

Can You View A House Without A Mortgage In Principle? 

Yes, it is often possible to view a property without providing proof that you have a mortgage in principle but some estate agents will require you to have one. Estate agents are more likely to request that you have a mortgage in principle before a viewing if they anticipate there will be a lot of interest in the property. 

Having a mortgage in principle shows sellers that you are a serious buyer and may improve your chances of having an offer accepted if there are other offers from prospective buyers who do not have a mortgage in principle. 

Is A Mortgage In Principle A Binding Agreement? 

It is worth remembering that an agreement in principle is not legally binding. It doesn’t guarantee how much you can borrow or that your mortgage application will be approved. 

When you go through a full mortgage application, your lender will look more closely at your income, expenditure and credit score. You may also find the amount you can borrow when you apply for a mortgage will depend on the type of property you are buying. 

Is A Mortgage In Principle Reliable? 

A mortgage in principle tells you how much you might be able to borrow from a lender based on what they know about you through a credit check. 

While nothing is guaranteed, a mortgage in principle is a reliable guide to how much money you could borrow from a lender. 

What Can Go Wrong With A Mortgage In Principle? 

You might have your application rejected, and there are several reasons why applying for a mortgage in principle could go wrong. For example: 

• Affordability – your income or deposit may be too low. If you can’t meet affordability checks, you may need to re-examine your budget. 
• Job security – you may have changed jobs too often or too recently. Most lenders expect at least 3 months in the same job, but 6 or 12 months may open up more options. 
• Inconsistency – you have an inconsistent income. If you are contract-based or self-employed, it may help to provide proof of a steady income, such as two years’ accounts. 
• Credit score – you may have a low credit score. Examine your credit card usage and pay off your credit cards reliably. A credit search from a referencing agency may also reveal unpaid bills you can easily resolve, or outdated financial links to other people. 
• Application – your application is not complete or the information isn’t accurate. Ensure your details are up-to-date and correctly spelled. 
• Electoral roll status – you are not registered as a UK voter. Signing up to the electoral register can make you easier to identify. 
• Property repossession – your home was repossessed in the last 6 years. Try to keep the rest of your credit history meticulous after the repossession. 
• Mortgage application refusal – you have recently been refused a mortgage. Multiple hard credit applications can have a negative impact on your credit score, so try to space these out. 
• Debt or CCJs – your financial record might show uncontrolled spending, too much debt, or a County Court Judgement (CCJ) in the last 6 years. Again, do what you can to improve your credit history. 

Knowing whether your lender performs a ‘hard’ credit check is important. If they do, this can affect your credit history should your application be rejected. If you’re worried, choose a lender who will only perform a ‘soft’ credit check for your application. 

Want to find out more?  Explore our articles on stamp duty changes and rates on London property, find out about the cost of selling a house and learn about the costs of selling and buying a home.

Frequently asked questions

Kubie Gold can show you the best prime properties on the market in central London. Whether you are buying in Maida Vale, Baker Street or Soho, we are here to answer all your questions about mortgages and buying a flat or house. Contact us today.