TL;DR: First Direct, the telephone and digital bank that is part of HSBC, offers a mortgage in principle (also called an agreement in principle, AIP, or decision in principle) as the first step in a mortgage application. The MIP gives an indication of how much First Direct is prepared to lend based on the applicant's income, outgoings, employment status and a soft credit search. The MIP is typically generated within minutes online for existing First Direct current account customers and within a few working days for new applicants. The MIP is not a binding offer; the full mortgage application that follows is the binding decision after underwriting, valuation and full credit checks. First Direct mortgages are typically only available to applicants who already hold (or open) a First Direct 1st Account or HSBC current account, and the bank publishes its product range on the first direct website.
Last reviewed May 2026
First Direct is the digital and telephone arm of HSBC UK and is consistently among the top-rated UK banks in customer satisfaction surveys. Its mortgage proposition is built around its own range of products (fixed and tracker rates, residential and buy-to-let), distributed direct to consumers and through a small panel of intermediaries. The mortgage in principle is the entry point to the mortgage application, used by applicants to confirm borrowing capacity before house-hunting and to give estate agents confidence in their position.
This guide explains exactly how a First Direct mortgage in principle works in 2026: what it is, how to apply, what affects the outcome, what to do after receiving it, and what comes next in the application process. The mechanics are similar to other UK lenders, with some bank-specific details that apply to First Direct customers.
What a mortgage in principle is
A mortgage in principle (MIP) is the lender's initial indication of how much it would be prepared to lend, based on basic information about the applicant's income, outgoings and credit history. It involves a soft credit search (not visible to other lenders and not affecting the credit score), an affordability check against the income and outgoings provided, and the lender's standard scoring model.
An MIP is not a binding offer. The lender retains the right to decline the full mortgage application even after issuing a positive MIP, where the full underwriting, valuation, or hard credit search reveals something that the MIP process did not catch. In practice, a positive MIP issued on accurate information has a high probability of being followed by a positive mortgage offer.
The MIP is useful for two purposes: confirming realistic borrowing capacity to focus the house-hunting on properties within reach, and demonstrating to estate agents and sellers that the buyer has been credit-assessed and is a serious candidate. Most UK estate agents will not put forward an offer to a seller without sight of an MIP.
The First Direct MIP process
First Direct allows applicants to start an MIP through its online mortgage portal or by telephone with one of its mortgage advisers. The online process asks for personal details (name, date of birth, address history), employment status and income, outgoings and existing debts, the planned loan amount and the planned property price.
For existing First Direct 1st Account or HSBC current account customers, the bank already holds much of the personal and financial information, and the MIP process can complete in minutes. For new applicants, the process takes longer because First Direct needs to verify the information before issuing the MIP. First Direct typically requires the applicant to be (or to become) a First Direct 1st Account customer to proceed with a mortgage application; opening the account is part of the process.
The MIP outcome is normally available the same day for straightforward online applications, and within a few working days for cases referred to an adviser. The MIP document confirms the amount First Direct is prepared to lend in principle and is valid for 90 days. Re-running the MIP after 90 days uses a fresh soft credit search.
What First Direct looks at for the MIP
The MIP process applies First Direct's affordability rules to the applicant's stated income and outgoings. First Direct, as part of HSBC, follows the FCA's Mortgage Conduct of Business Sourcebook (MCOB) affordability rules. The bank applies an income multiple cap and a stress test at a higher interest rate to ensure the applicant can afford the mortgage now and under reasonable interest rate stress.
Income from employment, self-employment, pensions, investment income and rental income can be considered. Self-employed applicants typically need two or three years of accounts or SA302 self-assessment summaries; First Direct's stated criteria are published on its mortgage pages. Bonus and commission income is often considered, though typically with a discount to reflect variability.
The soft credit search at MIP stage is run by First Direct using the credit reference agencies First Direct subscribes to (typically Experian and Equifax). The check looks at the applicant's credit history, including defaults, CCJs, missed payments and current credit utilisation. The result feeds into the bank's scoring model.
From MIP to full application
Once the MIP is in place and the applicant has had an offer accepted on a property, the full mortgage application is the next step. The application includes the property details, the full income documentation (payslips, P60s, tax returns), bank statements, identity verification and any other information the bank needs.
First Direct's underwriter reviews the full application, runs a hard credit search, and instructs a valuation of the property. The valuation can be a desktop AVM (automated valuation model) or a physical valuation by a chartered surveyor, depending on the loan-to-value, the property type and the location. The underwriter's review and the valuation typically run in parallel.
The full mortgage offer is issued once the underwriter has approved the case and the valuation has come back at a level that supports the loan. The offer is normally valid for six months and can be extended in some circumstances. First Direct's published timescale for issuing an offer from full application is typically two to four weeks on straightforward cases.
What can change between MIP and offer
Several things can cause an MIP to be issued and then a full offer to be declined or reduced. The most common is a property valuation that comes in below the agreed purchase price, in which case the bank either lends a smaller amount (requiring more deposit) or, in extreme cases, declines the application. A second is undisclosed credit history found in the hard search that the soft search at MIP stage did not pick up.
A third is income that does not stand up to documentary verification: bonus income that turns out to be smaller than stated, self-employment profit that has fallen since the accounts used in the MIP, or recent reductions in income from a change of role. A fourth is an undisclosed financial commitment (a recent loan, increased childcare costs, a maintenance order) that affects the affordability calculation.
The way to avoid surprises is to be accurate at the MIP stage. Stating actual income, actual outgoings and actual credit history allows the MIP to be a useful indicator. Inflating income or omitting commitments to get a higher MIP figure usually leads to disappointment at the full application stage.
First Direct mortgage product range
First Direct offers fixed-rate mortgages (typically 2-year and 5-year fixes), tracker mortgages (linked to Bank of England base rate plus a margin), and standard variable rate fall-back products. The bank's product range is published on the first direct mortgage pages and is updated regularly. Most products allow overpayments of up to 10 percent of the outstanding balance per year without early repayment charge.
Maximum loan-to-value typically reaches 90 percent for first-time buyers and home movers on standard products, lower for buy-to-let. First Direct does not normally offer 95 percent loan-to-value products in 2026, although the position changes with market conditions. The bank's stated maximum loan amount and minimum deposit are published on the same pages.
First Direct accepts product transfers (where an existing First Direct mortgage customer moves to a new product at the end of their current deal) without re-underwriting, which is a faster route to a new fix than a full remortgage. Existing customers can normally request a product transfer up to 6 months before the current deal ends.
How we verified this
This article reflects First Direct's published mortgage information on its consumer website, the FCA's Mortgage Conduct of Business Sourcebook (MCOB) for the regulatory framework on affordability and product disclosure, the FCA's Financial Services Register for First Direct's regulated status as a division of HSBC UK, and the Information Commissioner's Office guidance on soft and hard credit searches. The specific mortgage rates and product details change frequently and the first direct website is the authoritative reference for current pricing. The MIP process described matches the published consumer journey on the bank's site.
Disclaimer: This article is general information about the First Direct mortgage in principle process. It is not financial advice or a recommendation of any First Direct product. The specific affordability calculation, product availability and rates depend on individual circumstances and current market conditions. Anyone considering a First Direct mortgage should check the current product range on the first direct website and either apply directly or take advice from an FCA-authorised mortgage broker.
Frequently asked questions
How long does a First Direct mortgage in principle take?
For existing First Direct 1st Account or HSBC current account customers, an online mortgage in principle can complete in minutes. For new applicants, the process takes a few working days while the bank verifies the information. The MIP is normally valid for 90 days; after that, a new MIP can be re-run using a fresh soft credit search.
Does a First Direct mortgage in principle affect my credit score?
The MIP uses a soft credit search, which is not visible to other lenders and does not affect the credit score. A full mortgage application later uses a hard credit search, which is visible to other lenders and can have a small short-term effect on the credit score. The hard search is normally only conducted after the offer is accepted on a property.
Can I get a First Direct mortgage without being a First Direct customer?
First Direct typically requires applicants to be (or to become) First Direct 1st Account holders to apply for a mortgage. Opening the 1st Account is part of the application process for new applicants. Existing HSBC customers may be able to access First Direct products under specific arrangements.
How much can I borrow with a First Direct mortgage in principle?
The MIP amount is based on First Direct's affordability calculation against the applicant's stated income, outgoings and credit position. The bank applies an income multiple cap and a stress test at a higher interest rate. The specific amount available depends on the individual case and current First Direct lending criteria.
What happens after I get a First Direct mortgage in principle?
The next step is to make an offer on a specific property (if not done already) and then submit a full mortgage application to First Direct. The full application requires documentary proof of income, bank statements, identity verification, and the property details. First Direct's underwriter reviews the application, instructs a valuation of the property, and issues a binding mortgage offer if the case proceeds satisfactorily.
