What is a Decision in Principle?

This is where we get an agreement from the lender for the mortgage you require based on initial assessment of your circumstances.

What does a lender do to make a Decision in Principle?

The lender will calculate from your income and outgoings the loan amount they feel is affordable.  They will look at your credit file to see how you run your finances and perform an internal credit scoring process.  They will then confirm ‘in principle’ that they are happy to proceed to a full application.  This means – subject to documentary evidence confirming your income, identity, etc. and a valuation being carried out on your chosen property to ensure it is suitable security for a mortgage.

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What is a ‘Footprint’

Part of the Decision in Principle process is a credit search for the lenders to look at how you run your finances.  This will either leave a soft or a hard footprint.  A soft footprint is where you and the lender in question only can see on your file that a search has been carried out.  A hard footprint is where this is viewable by any company checking your credit file.

What are the benefits to you, the applicant?

  • You know that your chosen mortgage with your chosen lender is possible.
  • If you are buying a property your estate agent knows that you will have the finances in place to support the offer they are putting to the vendor on your behalf.
  • The vendor is much more likely to accept your offer if you have a ‘Decision in Principle’ over someone else making the same offer who has not.

Are there any downsides to getting a Decision in Principle?

The simple answer to this is “no” as it gives you and your estate agent/the vendor peace of mind.  However it is worth pointing out that it is not advisable to get lots of decisions from different lenders as each one that leaves a hard footprint will show your credit file.  Two or three if necessary shouldn’t have an impact but any more than that may reduce your overall credit score.

How long does the process take?

A Decision in Principle can usually be obtained within 30 minutes.  However, depending on the number of requests a lender receives at any one time – if deals are being withdrawn or amended, if it is a bank holiday weekend, for example, the number naturally increases – it may take up to 2 or 3 days.

What is a Decision in Principle certificate?

Most lenders will issue a Decision in Principle certificate which is confirmation of the loan amount available to you.  This can be very useful particularly if you are buying a property because you can show it to your estate agent to prove that the offer you are making on a property is genuine and that you have taken the first steps to securing the mortgage required to make your purchase.  If your chosen lender does not provide such a certificate your mortgage broker will be happy to provide email/written confirmation of the Decision in Principle if required.