What Is a Mortgage in Principle for Contractors?

What Is a Mortgage in Principle for Contractors?

Blog Article

A Mortgage in Principle (also known as an Agreement in Principle or Decision in Principle) is a written statement from a lender showing how much they could be willing to lend you—based on your initial financial information. For contractors, it’s an important first step in the mortgage process.

Here’s what you need to know.

Why It’s Useful
Shows estate agents and sellers you're a serious buyer

Helps you understand your budget before house hunting

Gives early feedback on whether a lender is likely to approve you

Although it's not a guarantee of a mortgage, it’s a strong signal that you’re on the right track.

What Do Lenders Look At?
When issuing a Mortgage in Principle, lenders will consider:

Your contract rate or self-employed income

Credit score and financial history

Basic details about expenses and debts

For contractors, it’s important to work with a broker who can present your income in a way that aligns with lender expectations (e.g., annualising your day rate).

Will It Affect My Credit Score?
Some lenders perform a soft credit check that doesn’t affect your credit score, while others may run a hard check, which leaves a mark. Always ask before applying.

How Long Does It Last?
Most agreements are valid for 60 to 90 days, but you can request a new one if it expires before you find a property.

Is It Binding?
No—it’s not legally binding, and the lender can still refuse a full mortgage application if circumstances change or additional information doesn’t meet their criteria.

Final Thoughts
For contractors, a Mortgage in Principle is a valuable tool that helps you enter the property market with confidence. It’s also the first sign to sellers that your finances are in order.

At Contractor Mortgage Solutions, we help you secure a strong Mortgage in Principle that reflects your true earning potential as a contractor.