When you start the home buying journey, you’ll often hear the terms Mortgage in Principle and Mortgage Offer. While they sound similar they serve very different purposes and come at different stages of the process. Understanding the distinction can help you plan more confidently and avoid unnecessary surprises as you move toward buying a property.
A Mortgage in Principle (MIP) is an early, informal indication from a lender of how much they might be willing to lend you. It’s usually based on basic information such as your income, outgoings, and credit history, and sometimes includes a soft credit check. An MIP is not a guarantee of lending, but it shows estate agents and sellers that you are a serious buyer who is likely to be able to secure finance.
In contrast, a Mortgage Offer is a formal legally binding confirmation from the lender that they will lend you a specific amount, subject to stated conditions. This is issued after you have submitted a full mortgage application, provided supporting documents and the lender has carried out detailed checks, including a full credit assessment and a valuation of the property. Once issued, the offer usually lasts for a set period often three to six months.
The key difference lies in certainty and commitment. A Mortgage in Principle is provisional and can be withdrawn if your circumstances change or further checks reveal issues. A Mortgage Offer, however, represents the lender’s firm commitment to lend, assuming you continue to meet the conditions and nothing significant changes before completion. This is why solicitors will not proceed to exchange contracts without a valid mortgage offer in place.
In summary, a Mortgage in Principle helps you understand your budget and strengthens your position when house hunting, while a Mortgage Offer is the final approval that allows you to move forward with buying the property. Both are important milestones, but they play very different roles. Knowing when and how each applies will help you navigate the mortgage process with greater confidence and clarity.
