What is a decision in principle?
A decision in principle can be made by a mortgagee either before or after the granting of its mortgage. A decision in principle is not binding on the mortgagor and may be taken back by the mortgagor at any time. What is a decision in principle? The decision in principle provides the banks or other mortgage companies with the data they need to determine whether or not they should grant a mortgage. The decision in principle does not obligate the lender to actually issue a mortgage. However, it may help secure the applicant for loan approvals and may show that all parties have previously agreed to certain terms. The document is usually signed before any other procedures as part of the loan approval process. The parties have an agreed upon time frame to complete the mortgage requirements. A decision in principle is not a binding decision and can be withdrawn by either party involved at any time. If for some reason the application is rejected, it is possible that the applicant would req...