Have your heart set on a place of your own? When looking to buy a home, you might need a Decision In Principle. But what is it & why do you need one?
A Decision In Principle (DIP) is a certificate or statement from a lender that says ‘in principle’ they would be willing to lend a certain amount of money to you as a prospective borrower.
It can also be called a Mortgage Promise, Lending Certificate or a Agreement in Principle (AIP)
A DIP is usually undertaken before you submit a mortgage application or before you make an offer on a property.
Having a DIP shows that you can, in theory, afford a property, which makes you a more attractive and reliable buyer. This can help you stand out from other prospective buyers, which can be invaluable if the types of properties you are looking for are in competitive, high demand areas.
A DIP can also add reliability to your credit file if you have historic credit issues or if you have a limited credit history.
In order to get a DIP, you will need to supply a certain amount of basic information to a lender. This information will allow the lender to check your credit history to see if you are a reliable borrower and if they should consider lending you a certain amount of money. You can request a DIP at any point during the process of obtaining a mortgage from your mortgage adviser or directly from your lender. It is normally very quick to do, and can often be done online, over the phone or face-to-face. You will need to supply:
You can usually get a DIP within 24 hours and is usually valid for up to 90 days. Although DIPs tend to be free, some advisors may charge for this, so it is worth double-checking beforehand.
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