A Decision in Principle (DIP) is essentially the same thing as an Agreement in Principle. The name used depends on the lender. It confirms that, based on initial checks of your income, credit history and outgoings, a lender is willing in principle to offer you a mortgage up to a stated amount.
Some lenders and brokers use the term DIP to refer specifically to the stage where a slightly more detailed credit check is carried out compared to a basic AIP. In practice, however, most people and professionals treat the two terms as interchangeable.
A DIP is not a formal mortgage offer. It is a useful step that helps you understand your borrowing power and signals to sellers and estate agents that you are a credible buyer. Once you find a property, you proceed to a full mortgage application.
Your mortgage broker submits a DIP to a lender on your behalf. Within minutes, the lender confirms it would lend up to £300,000. Armed with this figure, you begin searching for homes within budget.
Key Points
- Functionally the same as an Agreement in Principle for most lenders
- Based on a preliminary credit and income check
- Not a binding mortgage offer
- Helps you understand your maximum borrowing amount
- Typically valid for 60 to 90 days