A mortgage agreement in principle can make the early stages of buying a home more concrete. Instead of browsing properties with only a rough guess at your borrowing power, you have an indication from a lender of how much it may be prepared to lend. It is not a mortgage offer, but it can help you set a realistic property budget and show an estate agent or seller that you have taken an important first step.
You may also see the same idea described as a mortgage in principle, decision in principle, DIP, AIP or mortgage promise. The wording varies between lenders, but the purpose is broadly the same: an early lending indication before you submit a full mortgage application.
What is a mortgage agreement in principle?
A mortgage agreement in principle is a preliminary assessment from a lender. You provide information about your income, regular spending, debts, deposit and personal circumstances, and the lender uses that information, its lending criteria and usually some form of credit check to estimate how much it might lend.
The figure is useful for planning, but it is conditional. The lender has not completed all the checks required for a formal mortgage offer or fully assessed the property you eventually choose. Your final borrowing amount can therefore change once the full application is reviewed.
What does a lender look at for a mortgage AIP UK application?
Each lender has its own criteria, so there is no single formula used for every agreement in principle mortgage application. You can generally expect questions about your earnings, employment, regular commitments and the deposit you expect to use.
You may be asked for your name, date of birth, recent address history, income, monthly spending, existing credit commitments and deposit size. A full application usually requires more evidence, such as payslips, bank statements, proof of identity and proof of deposit.
Affordability matters as much as income
A high salary does not automatically translate into a high mortgage amount. Lenders consider committed spending and existing debts as well as income. Loans, credit cards, childcare costs, maintenance payments and other regular commitments can all affect the result.
For example, two buyers earning the same salary could receive different AIP figures if one has substantial monthly debt repayments and the other has few fixed commitments. A mortgage affordability guide can therefore be more useful than relying on a simple income multiple.
Will an agreement in principle affect your credit score?
It depends on the lender. Many lenders use a soft credit search for an AIP, while some providers may use a hard search. Check the lender’s process before applying, especially if you are considering several applications in a short period.
A decision in principle mortgage application should still be treated carefully. Enter accurate information and avoid repeated applications simply to see which lender produces the biggest number.
How to get a mortgage agreement in principle
Prepare realistic figures
Gather your income details, monthly commitments, deposit amount and recent address information before you start. Use figures you can support later. An AIP based on optimistic income or understated spending may look encouraging but can fall apart during the full application.
Apply to a lender or through a mortgage broker
Many lenders let you request an AIP online, while a mortgage broker can help you identify lenders whose criteria may fit your circumstances.
Read the result as an indication, not a promise
If the lender issues an AIP, check the borrowing figure and any conditions. Use it to shape your property search, but leave room in your budget for buying costs and for the possibility that the final approved amount changes.
How long does a mortgage agreement in principle last?
Mortgage AIPs are commonly valid for around 30 to 90 days, although the exact period depends on the lender. If yours expires before you find a property, you can usually request a new one. The lender may ask you to confirm or update your information and may carry out another credit check.
A new job, lower income, additional borrowing, a larger deposit or a change in household commitments can all affect affordability.
What happens after you receive an AIP?
An AIP can help you focus on properties within a more realistic price range. It may also reassure an estate agent that you have considered your finances, although having one is not a legal requirement for making an offer.
Once you find a home and choose a mortgage, you move to the full application. The lender will verify supporting information, carry out more detailed financial checks and assess the property, normally including a valuation. Only after the lender is satisfied with both you and the property will it issue a formal mortgage offer.
A successful AIP therefore does not guarantee approval. Changes in your finances, information uncovered during verification, the value or condition of the property, or the lender’s criteria can change the outcome.
A practical way to use your AIP
Suppose your AIP suggests that a lender may advance up to £240,000 and you have a £40,000 deposit. It can be tempting to treat £280,000 as your automatic property budget. A safer approach is to account separately for legal fees, surveys, moving costs, any applicable property tax and money you want to keep as an emergency reserve. The highest theoretical purchase price is not always the most comfortable price.
Before viewing homes, write down three figures: the maximum purchase price suggested by your AIP and deposit, the monthly payment level you are comfortable with, and the cash you need to keep aside for the transaction. This helps stop an AIP from turning into a spending target.
Frequently asked questions
Is a mortgage agreement in principle the same as a mortgage offer?
No. An AIP is an early indication of what a lender may be willing to lend. A formal mortgage offer comes later, after a full application, supporting checks and assessment of the property.
Do I need an AIP before viewing or offering on a home?
Not as a legal requirement. However, an AIP can help you understand your budget, and estate agents or sellers may see it as evidence that you have started assessing how you will finance the purchase.
Can I get more than one agreement in principle?
Yes, but first check what type of credit search each lender uses. Multiple unnecessary applications can be unhelpful if they involve hard searches. A broker may also help narrow your options before you apply.
What should I do if my AIP expires?
You can usually apply for another one, either with the same lender or a different provider. Update any income, spending, debt or deposit information so the new assessment reflects your current position.
Using an AIP as a planning tool
A mortgage agreement in principle is most valuable when you use it as a planning tool rather than as approval to borrow a fixed amount. It can narrow your property search, highlight affordability issues early and make the next stage clearer. Keep your information accurate, check how the lender handles credit searches, and remember that the final decision comes only after the full mortgage application and property checks are complete.