Glossary · UK
What is Decision in Principle (DIP)?
A lender's initial indication of how much it might lend a borrower, based on a quick check of income and credit history, before a full mortgage application.
Full Definition
A Decision in Principle (DIP), also called an Agreement in Principle or Mortgage in Principle, is a statement from a lender indicating how much it would be willing to lend a borrower, based on basic information about income, outgoings and a soft credit check that does not affect the borrower's credit score. It is not a guaranteed offer -- the lender still carries out full affordability checks, income verification and a property valuation before making a binding mortgage offer, and a DIP can be withdrawn or reduced if the full application reveals different information. Estate agents commonly ask for a DIP before allowing an offer to be accepted on a property, since it demonstrates the buyer has some evidence of being able to secure a mortgage of the required size. A DIP is normally valid for a limited period, commonly 60 to 90 days, after which it may need to be renewed if a suitable property has not yet been found.