It is surprising how many clients approach us and ask:
“Can you get more than one decision in principle?”
Now the short answer is yes. You can actually apply for as many DIPs as you want to. But we think the more important question is:
Should you get more than one Decision in Principle?
The answer, as it turns out, is complicated. Here we’ll explore what a mortgage DIP is and how it works. We’ll also take a look at why potential borrowers might want to apply for multiple DIPs. So read on to learn more!
What is a mortgage decision in principle (DIP)?
A mortgage decision in principle (DIP) is basically a statement from a lender saying that they’re willing to give you a mortgage, up to a certain amount.
This amount is based on things like your income, your credit score, and the value of the property you’re looking to buy.
It is not a guarantee of a mortgage, and all of the information will need to be checked again and verified when you formally apply for the mortgage.
It’s a bit like a mini mortgage application.
Getting a DIP can be a helpful first step in your mortgage journey, as it gives you an idea of how much you can borrow and helps to speed up the application process.
You will find more information in our article: What is a mortgage Decision in Principle?
Do I need a decision in principle or an agreement in principle?
- Agreement in Principle (AIP) ?
- Mortgage in Principle (MIP) ?
- Decision in Principle (DIP) ?
Don’t worry, they’re all the same thing!
What are they used for?
DIPs are often used by potential borrowers who are in the early stages of shopping for a property. They can be helpful in giving you an accurate indication of how much you’re likely to be able to borrow, along with the monthly repayment costs.
They are commonly used by first time buyers and borrowers that are on a tight budget who need confirmation of how much they could borrow.
Estate agents and sellers may also request to see a DIP before they agree to sell a property to you (or even to view it!), as it shows that you’re serious about buying and have the necessary finances in place. This is often the case for first time buyers.
How long does a decision in principle last?
DIPs only last for a certain amount of time and are generally valid for 30 to 90 days, depending on the lender.
Lenders need to be able to make their assessments on the most up to date information, so there’s always an expiry date. It’s a very similar situation with mortgage offers, they too only last for a fixed period of time.
If you haven’t made a mortgage application during this period then you can ask for the DIP to be renewed, or choose a different lender.
In a recent survey* the main reason for requiring a DIP was:
- 32% – To find which lender offers the most
- 35% – As proof for an estate agent
- 39% – To check if a bank would lend
- 55% – To see how much could be borrowed
How do you get a mortgage decision in principle?
Getting a mortgage decision in principle is usually a fairly straightforward process and can often be done online.
You’ll need to provide some basic information about yourself and your finances and the type of property you intend to buy.
You can either apply direct with a lender or ask an independent mortgage broker to help you.
A recent survey* found that 56% of borrowers went direct to a lender and 44% used a mortgage broker when arranging a Decision in Principle.
Depending on your mortgage experience, taking the direct route might be like looking for a needle in a haystack.
How do you narrow down which is the best lender to approach for a decision in principle? And do they offer the best deal for someone like you?
By using a broker they will quickly be able to determine what range of lenders would be the most likely fit for your circumstances. Your broker can certainly organise the DIP for you and this would be with the lender that is the closest match, with the best rates.
Don’t forget that some borrowers require a specific type of lender and mortgage and these may not be obvious from just searching the high street.
Typically people who are self-employed, company directors or those who have some form of bad credit would benefit from a lender who is more experienced with similar borrowers.
Can/Should you get more than one decision in principle?
In a survey* of 1000 mortgage borrowers, of those that had obtained a DIP, 35% had approached one lender and 42% had applied to two.
It certainly is possible to apply for multiple DIPs from different providers. And there’s no real maximum limit.
However, it’s not very practical to spend time just randomly applying for DIPs in the hope that one might offer what you need!
While many lenders carry out a soft credit search, which doesn’t affect your credit file, other may use a hard search which leaves a record on your file.
If you accrue too many hard searches in a short space of time this is likely to damage your credit score because it suggests to potential lenders that you’re desperately searching for credit. (which is probably true).
The better option is to let your mortgage adviser do the hard work for you by researching which lenders are best suited to someone like you. This will look at your employment status, income, expenses, credit report, deposit, property value etc.
Then from that list they can select the lenders that offer the best terms and interest rates.
From the shortlist your broker can recommend one lender for the decision in principle.
Taking this route will save you loads of time, and stress and keeps your credit file nice and clean!
* Source: In November 2021 Legal & General surveyed 1000 people who had recently taken out a mortgage.
Do you have to go back to the same lender?
Let’s say that you got multiple DIPs, from both Halifax and Nationwide. Does this mean that you can only get a mortgage from these two?
Absolutely not!
You are free to apply to any lender, with or without a prior Decision in Principle.
The problem is that without a DIP you won’t have any indication that your application will be successful.
A DIP is a heads up that your situation is a good fit for a lender but it doesn’t mean that you are obliged to go back to them.
Your mortgage adviser will be able to suggest the best course of action but in most circumstances it’s a good idea to choose your ‘new’ lender and then apply for a DIP with them.
If it’s a pass then you can confidently move on to making a full mortgage application.
