Getting a mortgage agreement in principle

A mortgage Agreement in Principle (AIP) is an indication of how much you’ll be able to borrow from a mortgage lender. Some estate agents may insist that you have one before showing you available properties.

A mortgage Agreement in Principle (AIP) is an indication of how much you’ll be able to borrow from a mortgage lender. Some estate agents may insist that you have one before showing you available properties.

Daniel Evans
Mortgages expert
5
minute read
Do you know someone who could benefit from this article?
Last Updated 20 DECEMBER 2022

What is a mortgage agreement in principle?

An Agreement in Principle (AIP) is sometimes called 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 (but it may be faster – as little as 15 minutes).

How can I get an agreement in principle?

You have two options. You can go to a mortgage broker and see what mortgage deals are available that you might be eligible for. Many brokers (including our mortgage partners London & Country Mortgages Ltd) will be able to sort out an AIP straight away.

Alternatively, you could go direct to the lender that’s offering a deal that you’re interested in. It may take a little longer to get an AIP this way – most lenders will give you an idea of how long.

It can make things simpler if you get an AIP from the mortgage provider you’re likely to want to get your mortgage from, but it isn’t essential. You can still change your mind about who to borrow from when it comes to applying for a mortgage, so don’t worry about being tied in.

When should I get a mortgage agreement in principle?

Estate agents will often ask if you have a mortgage in principle, so it’s good to have one sorted before you begin your property search in earnest.

But if you’re still at the stage of seeing what you can get for your money in different locations, use our mortgage calculator to give you a ballpark figure of what you can potentially afford.

What do I need for a mortgage agreement in principle? 

To get a mortgage in principle, you’ll need to supply various details about yourself and anyone else you’re buying a property with. These include:  

  • Personal details, including your name and date of birth 
  • Addresses for the past three years 
  • Details of your income and monthly outgoings. 

Getting a mortgage agreement in principle will require a credit check to be carried out. This will look at your credit history, including any past or present loan or credit card debts, to work out whether you’re a suitable applicant.

How long does an agreement in principle last?

An AIP is typically valid for up to 90 days, but it’s up to the lender and can be a little as 30 days. If it takes you longer to find the perfect home, you can usually reapply for a new AIP.

Will getting an agreement in principle affect my credit score?

It may do. When you apply for an AIP, the lender will run a credit check to assess your eligibility. If they run a hard search, it will leave a ‘footprint’ on your credit file that will be visible to other lenders. A high number of hard searches in a short period of time can have a negative impact on your credit score, as it could signal that you’re struggling to get credit from lenders. 

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

You can get a free credit check from a credit reference agency, such as Experian, Equifax and TransUnion. 

Comparing mortgages with Comparethemarket doesn’t require any kind of credit check and won’t affect your credit score.

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 you want to buy.   

A mortgage adviser or lender will use the information you gave to get the AIP 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, changes to interest rates or your personal circumstances having changed. 

What are the benefits of having a mortgage in principle?

Getting a mortgage in principle is useful because it indicates to sellers and estate agents that you can afford to buy a property. It’s also reassuring for you as a buyer and gives you an idea as to which properties you can afford.

What happens after I get an agreement in principle?

If you haven’t already started looking for a property, an AIP gives you a very clear idea of your budget.

Once you’ve found the property you want to buy, you should contact the broker or lender to start the formal mortgage application process. A property valuation will need to be done, as well as hard credit checks, before the lender will issue a mortgage offer.

A lender can still change their mind after giving you an agreement in principle, and not make a mortgage offer or change the terms once they’ve considered your application. 

What’s the difference between a mortgage in principle and a mortgage offer? 

A mortgage in principle is an indication of how much you can borrow, but it’s not a firm confirmation. A mortgage offer is an official agreement from a lender that they’ll provide you with a mortgage.

Can you get a mortgage agreement in principle when you’re a first-time buyer? 

Yes, if you’re a first-time buyer, estate agents will often encourage you to get a mortgage in principle because it reassures everyone that you’re able to buy.

Compare mortgages

If you want to see the latest mortgage deals, use our  mortgage comparison service today.

Compare mortgages quickly and easily Start comparing