Mortgage Agreement in Principle: What It Tells You and What It Doesn’t
An agreement in principle is a lender’s early estimate of what it might lend you. It’s useful when house hunting, as long as you know its limits.
What to know
- An agreement in principle (AIP) is an early indication of how much a lender might lend, based on basic information.
- It isn’t a mortgage offer. The lender can still decline after the full application and valuation.
- Some lenders use a soft credit search for an AIP and others a hard search, so ask before applying.
- Estate agents may ask for one to show you’re a serious buyer.
An agreement in principle, also called a decision in principle or mortgage in principle, is a statement from a lender that it would probably lend you a certain amount, based on what you’ve told it so far. It’s a planning tool rather than a promise.
What the lender checks
To give an AIP, a lender usually asks for:
- your income and employment
- regular outgoings and existing debts
- your address history
- permission to run a credit search
It doesn’t usually check documents or value the property at this stage.
Soft and hard searches
A soft search lets a lender see your credit file without leaving a mark other lenders can see. A hard search is recorded on your file and visible to other lenders. Lenders differ in which they use for an AIP, so ask before you apply, and avoid applying to many lenders with hard searches in a short time.
AIP compared with a mortgage offer
| Agreement in principle | Mortgage offer | |
|---|---|---|
| When | Before you find a property, or early on | After a full application |
| Checks | Basic details and a credit search | Documents, affordability, credit, valuation |
| Binding on the lender? | No | Yes, subject to its conditions |
| How long it lasts | Often 30 to 90 days | Often several months, depending on the lender |
Handy tip
Keep the details on your AIP consistent with your full application. Differences in income or debts are a common reason for delays.
Why it can still fall through
After you’ve found a property, the lender will check your payslips, bank statements and identity, and value the property. A lower valuation, a change in your circumstances or something new on your credit file can lead to a smaller offer or a decline. Our guide to how lenders assess affordability explains what they look at.
Good to know
Some estate agents ask to see an AIP before arranging viewings or accepting an offer. It shows you’ve started the process, but it doesn’t guarantee your mortgage.
Using an agreement in principle well
Get an AIP when you’re ready to start viewing, not months before, so it’s still valid when you make an offer. Use it to set a realistic price range, and leave room for a valuation that comes in lower than you hoped. When it’s time to choose a deal, our comparison of mortgage rate types and our guide to loan-to-value can help.
Your questions
How long does an agreement in principle last?
It depends on the lender, but many last between 30 and 90 days. You can usually renew it if your circumstances haven’t changed.
Does getting an AIP affect my credit score?
A soft search isn’t visible to other lenders and doesn’t affect your score. A hard search is recorded, so several in a short period can count against you.
Do I have to use the lender that gave me the AIP?
No. An agreement in principle doesn’t commit you to anything, and you can apply to a different lender later.
This guide explains how UK borrowing works in general terms and isn’t financial advice. Rates, rules and lender criteria change, so check the details with the lender, GOV.UK or the Financial Conduct Authority before you decide. For advice on your own circumstances, speak to an FCA-authorised mortgage or financial adviser. If you borrow against your home, it may be repossessed if you do not keep up repayments.
