Agreement in Principle Explained

An Agreement in Principle can help you understand how much you may be able to borrow before you start viewing properties or making offers. This guide explains what an AIP is, how it works, what checks may be involved, and what happens after one has been issued.

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Book an initial mortgage review call and we can check your position, explain your likely options and let you know whether an Agreement in Principle is the right next step.

What Is an Agreement in Principle?

An Agreement in Principle is a lender’s initial indication of how much they may be prepared to lend, based on the information provided at this stage. It is not a formal mortgage offer, but it can be useful when speaking with estate agents, viewing properties or making an offer.

  • Gives you an initial idea of your borrowing position
  • Can help show estate agents you are serious
  • Usually happens before the full mortgage application
  • Still depends on documents, underwriting and the property being acceptable

How an Agreement in Principle Works

An Agreement in Principle is usually one of the first practical steps when you are starting to look at properties or thinking about making an offer.

It gives you an initial indication of how much a lender may be willing to lend, based on the information provided at this stage. It is not a guaranteed mortgage offer, but it can be a useful way of understanding your position before you move further into the buying process.

Below is a straightforward overview of how the Agreement in Principle process usually works.

1. Initial Mortgage Review Call

The first step is usually a relaxed conversation about your circumstances, income, deposit, credit history and future plans.

This helps us understand what may be achievable, whether there are any obvious issues to be aware of, and which lenders may be most suitable for your situation.

You do not need to have everything perfectly prepared before this call. The aim is to get a clear starting point and explain the next steps in simple terms.

2. Checking Your Affordability

Before applying for an Agreement in Principle, we need to look at how much you may be able to borrow.

Lenders do not all calculate affordability in the same way. They may look at your income, regular commitments, credit commitments, dependants, deposit size and overall financial position.

This is why it is important not to rely on a rough online calculator alone. A mortgage broker can compare lender approaches and help identify which options look most realistic.

3. Choosing a Suitable Lender

Once we understand your position, we can consider which lender may be best placed for the Agreement in Principle.

This is not always simply the lender with the lowest interest rate. The right option may depend on affordability, credit scoring, income type, deposit size, property type and lender criteria.

The aim at this stage is to choose a lender that gives you a realistic and sensible starting point before you begin making offers.

4. Submitting the Agreement in Principle

Once the lender has been selected, the Agreement in Principle can usually be submitted using the information provided.

The lender may carry out a credit check and assess the basic details of the case. Depending on the lender, this may involve either a soft or hard credit search.

If the Agreement in Principle is accepted, it gives an initial indication that the lender may be prepared to consider the mortgage, subject to the full application, supporting documents, property valuation and underwriting.

5. Using the Agreement in Principle

An Agreement in Principle can be useful when viewing properties or making an offer.

Estate agents often ask whether your mortgage position has been checked, and having an AIP can help show that you have taken sensible steps before offering on a property.

It can also give you more confidence about your budget, helping you focus on properties that are more likely to fit your borrowing position.

6. Full Mortgage Application

Once your offer has been accepted on a property, the full mortgage application can then be submitted.

At this stage, the lender will review the full details of the case, including your documents, income evidence, bank statements, credit file, the property valuation and any other information they require.

The Agreement in Principle is therefore an important early step, but it is not the final approval. The formal mortgage offer only comes later, once the lender has completed their full assessment.

Important Note

Does an Agreement in Principle Guarantee a Mortgage?

No. An Agreement in Principle is not a formal mortgage offer. It is an initial indication from a lender based on the information provided at this stage.

The lender will still need to assess the full mortgage application, supporting documents, credit information and the property before issuing a formal mortgage offer.

Important things to remember:

  • Your circumstances still need to match the information provided
  • The property must be acceptable to the lender
  • The lender may still request further documents or clarification
  • Rates and lender criteria can change
  • The final decision is made at full application stage

When Should You Get an Agreement in Principle?

It is usually sensible to review your mortgage position before you seriously start viewing properties or making offers. This helps you understand your likely budget, identify any issues early and move forward with more confidence.

Before Viewing Properties

So you have a clearer idea of the price range that may be realistic before spending time arranging viewings.

Before Making an Offer

Estate agents may ask whether your mortgage position has been checked before putting an offer forward to the seller.

Before Choosing a Lender

Different lenders assess affordability and criteria in different ways, so it helps to check which options are likely to fit your circumstances.

Common Agreement in Principle Questions

Clear answers to common Agreement in Principle questions, from when to apply to how the decision works and what it means when viewing properties.

Some lenders carry out a soft credit search, while others may carry out a hard credit search. A soft search usually does not affect your credit score, but a hard search may leave a visible footprint on your credit file.

As part of the process, we can explain which type of search is likely to be involved before proceeding

An Agreement in Principle usually lasts for a limited period, often around 30 to 90 days depending on the lender.

If it expires before you find a property, it may be possible to refresh or resubmit it, subject to your circumstances and the lender’s criteria at that time.

You do not always need one before viewing, but it can be helpful.

Some estate agents may ask whether your mortgage position has been checked, especially if you want to make an offer. Having an Agreement in Principle can show that you have taken sensible steps before moving forward.

No. An Agreement in Principle is not a formal mortgage offer.

It is an initial indication from a lender based on the information provided at that stage. The lender still needs to review the full application, documents, credit information and property valuation before issuing a mortgage offer.

Yes, it can be declined.

This may happen because of affordability, credit scoring, credit history, deposit level, employment type, or lender criteria. If this happens, it does not always mean you cannot get a mortgage, but it may mean a different lender or approach is needed.

You will usually need to provide details about your income, deposit, employment, regular commitments, credit history and the type of property or mortgage you are considering.

You do not need to have every document ready before the first conversation, but accurate information helps avoid issues later.

You can make an offer without one, but it may put you in a weaker position.

Estate agents often want to know whether your finances have been checked before putting your offer forward seriously to the seller. An Agreement in Principle can help support your position.

Once you have an Agreement in Principle, you can usually continue viewing properties and making offers with more confidence.

When your offer is accepted, the next stage is the full mortgage application. At that point, the lender will review your documents, income, credit file, the property valuation and any other information they need before deciding whether to issue a formal mortgage offer.