WHAT IS MORTGAGE IN PRINCIPLE ?
Mortgaging a property in the UK involves a lot of complex procedures, transactions of heavy amounts, and certain other factors like trust, etc. The element of trust in a Mortgage deal is considered to be the most important. The deal should be closed as per the terms, conditions, and promises made initially. One such part of the Mortgage deal is the Mortgage in Principle which is based on the bond of trust between the lender and the borrower.
Mortgage in Principle UK
A Mortgage in Principal is known by different names like Decision in Principle, and Agreement in Principle, abbreviated as (DIP) and (AIP) respectively. It is kind of a promise letter on behalf of the lender that a certain amount will be given to the borrower before the finalization of the home. The Mortgage in Principle letter will be given after calculating the amount of mortgage that will be sanctioned to the borrower and also after doing all the required security & precautionary checks.
It is used as an assurance letter that the buyer can show to the seller of the house stating that the home buyer is eligible to get a mortgage of a specific amount that is needed for buying a property in the UK. Thus, it is a type of assurance that states that the borrower of the mortgage can afford the property. Therefore, the person with the Mortgage in Principle letter will have a better chance of getting the property in case there are other parties who are willing to get the property.
Validity of Mortgage in Principle
The Mortgage in Principle is usually valid for 6 months from the time of issuance of the letter. However, it can also be extended in a hassle-free manner, provided that the condition of the borrower has not been changed. It also must be noted that the Mortgage in Principle is not essential to buy a property in UK.
