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Getting a mortgage Agreement in Principle

Getting a mortgage Agreement in Principle

A mortgage Agreement in Principle (AIP) helps you work out how much you could borrow from a mortgage lender.  Some estate agents may insist that you have one before showing you available properties. 

Tobi Owens
From the Mortgages team
minute read
posted 2 JANUARY 2020

What is an Agreement in Principle?

An Agreement in Principle (AIP) can also be referred to as a Mortgage in Principle (MIP), Decision in Principle (DIP) or an Approval in Principle (AIP).

To get one, you provide your mortgage broker or potential lender with information about your finances and they give you an indication of how much you’ll be able to borrow.

You can usually get an AIP online through a lender’s website or in branch. You’re likely to receive your results within 24 hours  and it is normally valid for up to  90 days.

Will getting an Agreement in Principle affect my credit score?

When you apply for an AIP, the lender will run a credit check to assess your eligibility. You'll need to ask what level of credit survey they do – if the lender runs a 'hard' search, it will leave a 'footprint' on your credit file that will be visible to other lenders. A search footprint is a record left by a credit reference agency every time your credit report is searched, either by yourself or by others. If there are a high number of hard searches in a short period of time, it can have a negative impact on your credit score as it could signal that you're struggling to get accepted by other lenders.

However, if the lender runs a 'soft' search, it won't leave a footprint and it won't impact your credit score.

To better understand your credit score, you can request your credit report from credit reference agencies such as Experian, Equifax and TransUnion.

Is an Agreement in Principle guaranteed?

An AIP is not a guarantee that you’ll get a mortgage offer - you’ll still need to go through the full mortgage application process when you find a property that you want to buy.  

An AIP is normally valid for up to 90 days and a mortgage adviser or lender will be able to use the information as part of the full application process. However, they'll want to make sure the details are still correct.  

There are factors that may affect the lender’s decision when you make a full application, such as their lending criteria or your personal circumstances having changed. 

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