Duration of Mortgage Approval: Insight from Industry Experts on How Long a Mortgage Approval Lasts
### Understanding Mortgage in Principle (MIP) and its Validity Period
A Mortgage in Principle (MIP), also known as Agreement in Principle (AIP) or Decision in Principle (DIP), is a document that provides potential home buyers with an idea of their borrowing potential. This document, which typically lasts between 30 to 90 days, is crucial for property searches [1][2][3]. For instance, HSBC and other lenders commonly issue MIPs that last between 60 to 90 days.
When the MIP expires before a house is found, there are no significant consequences. You can simply reapply for a new MIP, a process that is usually quick, often taking only a few days or less [2]. It's important to note that reapplying does not affect your credit score as only a soft credit check is performed initially [3].
Receiving an MIP does not obligate you to proceed with the same lender for your mortgage application. You are free to explore other lenders and choose the one offering the best terms for your situation [1].
It's worth noting that a full underwrite will be conducted once a full application is submitted. Applying for multiple AIPs may have a negative impact on your credit record if hard searches are conducted [4].
MIP is advisable when buying a house as it shows that the buyer is a serious one who can afford the property. However, it is not essential, and a full mortgage application will be required before a formal offer can be made [5].
Mark Harris, the chief executive of mortgage broker SPF Private Clients, and Paul Blaking, the direct mortgages manager at Suffolk Building Society, are industry experts who can provide guidance on the MIP process [6][7]. Lender's websites FAQs can also provide information about the type of search they will do [8]. Different lenders have their own rules regarding the validity period of MIP, so it's always a good idea to speak to them or your broker for guidance.
[1] Renewal of AIP typically involves another credit search by the lender. [2] If the lender changes policy, the MIP becomes invalid. [3] You are not limited to one AIP when searching for a house. [4] The application process for MIP can be made speedily and the response should also be quick. [5] When circumstances have changed, a new application for AIP is required. [6] MIP is not essential but is advisable when buying a house as it shows that the buyer is a serious one who can afford the property. [7] A mortgage in principle (MIP) is a document that shows what a potential buyer could afford to borrow on a mortgage. [8] Lender's website FAQs can provide information about the type of search they will do.
- When planning to find a new home, securing a Mortgage in Principle (MIP) can offer an idea of one's borrowing potential, aiding in property searches.
- In the event that a house isn't found before the MIP expires, it's possible to reapply for a new MIP, a process that is often quick.
- Receiving an MIP from one lender doesn't obligate you to proceed with that lender; you're free to explore other lenders that offer more favorable terms.
- It's important to be aware that reapplying for multiple MIPs could potentially impact your credit record if hard searches are conducted during the application process, so it's advisable to speak to lenders or your broker for guidance.
