What is a Decision in Principle (DIP) and how long is it valid?

Full answer

A Decision in Principle is a useful early step in the home-buying process, giving both buyers and estate agents (or sellers) some confidence about a buyer's likely borrowing capacity before a full, formal mortgage application is submitted. **What it involves** To get a Decision in Principle, you (or a mortgage broker on your behalf) provide a lender with basic information -- income, existing debts, deposit size, and sometimes employment status -- and the lender carries out a "soft" credit check (which does not usually affect your credit score or show up to other lenders as a hard search) alongside this information to give an indicative maximum amount they might lend, and sometimes an indicative rate. **What it is NOT** A Decision in Principle is not a binding mortgage offer, and it does not guarantee the lender will actually lend you that amount once you make a full application -- at that later stage, the lender carries out a full credit check (a "hard" search, which does affect your credit file), verifies your income with payslips or accounts, and values the specific property you want to buy. Any of these later checks can result in a lower offer, additional conditions, or an outright decline, even after a positive Decision in Principle. **Why estate agents ask for one** Many estate agents will not accept an offer on a property, or will treat it less seriously, without evidence of a Decision in Principle, since it demonstrates the buyer has at least had a preliminary assessment of their ability to secure a mortgage of the required size -- this is particularly common in competitive markets or with higher-value properties. **How long it lasts** A Decision in Principle is typically valid for a limited period, commonly in the region of 60 to 90 days depending on the lender, after which it expires and needs to be refreshed if you have not yet proceeded to a full application or completed your purchase. If your financial circumstances change materially during this period (for example you take on new debt, change jobs, or your credit score changes), the original Decision in Principle may no longer be reliable even if technically still within its validity window. **Multiple Decisions in Principle** Because most Decisions in Principle use a soft credit search, you can usually obtain them from several different lenders (or via a broker comparing several lenders at once) without damaging your credit score, which can help you understand your realistic borrowing range before committing to a full application with any one lender. **Worked example** A first-time buyer obtains a Decision in Principle indicating a lender would consider lending up to £220,000 based on their income and a 10% deposit. They use this to make an offer on a £240,000 property (with their £24,000 deposit making up the difference). When they proceed to a full mortgage application, the lender's formal underwriting confirms the £220,000 loan, subject to a satisfactory property valuation -- though in some cases, the full application could reveal a lower actual offer if, for example, the hard credit check reveals something the soft search missed. **Practical tip** Treat a Decision in Principle as a useful guide to your realistic budget, not a guarantee -- avoid taking on new credit, changing jobs, or making large unusual transactions between getting a Decision in Principle and completing your full mortgage application, as this can jeopardise the eventual formal offer.

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