Decision in Principle (DIP): what it is and what it isn't

What is a Decision in Principle?

A Decision in Principle (DIP) – also called an Agreement in Principle (AIP) or Mortgage in Principle (MIP) – is a statement from a lender saying that, based on basic information about your income, outgoings and credit history, it would be willing in principle to lend you a certain amount.

It is the first formal step in the mortgage process and shows what you can realistically afford before you start viewing properties and making offers.

What a DIP is not

• It is not a mortgage offer. The formal Mortgage Offer is only issued after a full application, document checks and a property valuation.
• It is not a guarantee. A lender can still decline at full application, for example if documents don't confirm your income, your circumstances change or the valuation comes in below the purchase price.
• It does not lock in a rate. Rates and terms can change until the full application is submitted.

Why do estate agents ask for a DIP?

Agents want to know that a buyer is ready to proceed. A DIP shows you have already spoken to a lender or broker and that your offer is realistic. When several buyers want the same home, a buyer with a DIP is often taken more seriously. Some agents ask for one before arranging a viewing.

How long does a Decision in Principle last?

Usually 30 to 90 days, depending on the lender. If you haven't found a property by then, the DIP can be renewed – ideally with updated details if, for example, your salary has changed.

Does a DIP affect your credit score?

It depends on the lender. Some use a soft search, which other companies can't see and which doesn't affect your score. Others use a hard search, which is recorded on your credit file. Several hard searches in a short period can look negative to lenders.

That is why it's best not to apply for DIPs with lots of lenders yourself. A broker first checks your circumstances against lenders' criteria and then approaches the one most likely to accept you.

What information do you need for a DIP?

• personal details and addresses for the last 3 years,
• employment and income details (employed, self-employed, limited company director or CIS),
• regular outgoings and credit commitments (credit cards, loans, car finance),
• the expected purchase price and your deposit.

At Balltica Consulting we ask for your documents before applying for a DIP: payslips, bank statements, SA302s if you're self-employed and proof of deposit. We check them straight away so your DIP is based on real figures, not estimates. This helps you avoid disappointment later, when a lender reduces the amount or declines at full application because the documents don't match the information given earlier.

What happens after the DIP?

1. You find a property and make an offer.
2. Once it's accepted, your broker submits a full application.
3. The lender checks your documents (underwriting) and instructs a valuation.
4. If everything is in order, the lender issues a Mortgage Offer and sends it to the solicitors.

At Balltica Consulting the initial review and meeting are free. Our fee for arranging a DIP is £250, charged only once you decide to work with us. See our full process and fees.