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What is an agreement in principle?
When you’re preparing to buy a home, an Agreement in Principle (AIP) can offer reassurance and clarity on your mortgage options. Often called a Mortgage in Principle, Mortgage Promise, or Decision in Principle, it’s a written estimate from a lender that shows how much they might be willing to lend you. This estimate is based on a quick review of your income and a soft credit check.
It’s important to note that an AIP is not a mortgage offer, and it has no impact on your credit score. However, it’s a valuable first step that can help boost your confidence when starting your property journey.
What does an Agreement in Principle tell you?
An AIP provides a snapshot of how much you might be able to borrow from a lender, based on the information you’ve provided. It does not guarantee mortgage approval, as your situation could change by the time you formally apply. Other factors can also affect the final decision, such as the property you’re buying, the results of a full hard credit check, and any additional checks the lender carries out. In short, an AIP is a useful guide, but not a guarantee.
When do you need an Agreement in Principle?
Estate agents may request one before you view properties or make offers, helping you to show you're a serious buyer. It’s also a confidence booster when you begin house hunting, as it provides a realistic idea of what you can afford.
For first-time buyers and those looking to move home, it can be a crucial tool to assist in budgeting and decision-making.
Read our guide on How much does it cost to move house?
Pros and Cons of an Agreement in Principle
Pros:
- Quick and easy to get online
- Helps set a realistic budget
- Shows sellers you're serious
- No impact on your credit file with soft checks
Cons:
- Not a mortgage guarantee
- Based on estimated information
- May expire or change if your situation changes
For those just starting out, or if you're not quite ready to apply, a mortgage calculator can provide a quick indication of your affordability.
How do you get an Agreement in Principle?
You can apply for an AIP online, by phone, or in person with a lender or mortgage adviser. Typically, you’ll need to provide personal details, information about your income, outgoings, deposit amount, and address history.
Looking to apply for a mortgage in principle, get in touch to find out more.
What happens afterwards?
Once you’ve received your AIP, you can start viewing properties that fit your budget. When you make an offer on a property and it’s accepted, the AIP supports your full mortgage application. At this point, the lender will perform a more thorough review, including full credit checks and a property valuation.
For more information on mortgages, explore our mortgage guides.
Common mistakes to avoid
It’s important to understand what an AIP does and does not guarantee. Many people make common mistakes, such as:
- Mistaking the AIP for a full mortgage offer
- Applying for properties above the AIP amount
- Making major financial changes (e.g. taking out new credit) after receiving an AIP
- Failing to check whether your property type is acceptable to lenders
To avoid these mistakes, it's important to stay in control of your financial situation and understand that an AIP is only a snapshot of your potential borrowing power.
Learn more about common mortgage mistakes to avoid
Agreement in Principle FAQs
An AIP usually involves a soft credit check, which will not affect your credit score.
However, if a hard credit check is involved, it might have a small, temporary impact. The effect can depend on how many hard checks you’ve had recently— multiple applications in a short space of time may signal to lenders that you’re relying more heavily on credit. This could reduce your chances of being approved or affect the terms you’re offered. Spacing out applications and only applying when necessary can help minimise any impact.
An AIP typically lasts for about 30 to 90 days, depending on the lender. If it expires, you may need to apply for a new one.
Yes, an AIP is not a guarantee of mortgage approval. If your circumstances change or the lender discovers new information, the mortgage offer may still be declined.
To apply for an AIP, you typically need to provide your personal details, income information, monthly outgoings, deposit amount, and address history.
An Agreement in Principle is a helpful first step in your property journey. While it’s not a guarantee of a mortgage, it offers a clearer picture of what you might be able to borrow and helps you house-hunt with confidence.
Ready to start your mortgage journey? Apply for a mortgage in principle with TSB today!
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