A mortgage agreement in principle (AIP) is a document that displays the amount you can borrow from a mortgage lender.
With this document, you can start searching for properties with confidence while staying within your budget.
Additionally, possessing an AIP gives you credibility as a buyer, particularly with estate agents.
To apply for a mortgage in principle, you can submit an online enquiry. We'll examine your information to determine what's feasible.
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What Is A Mortgage In Principle?
A mortgage in principle, also known as an Agreement in Principle (AIP) or Decision in Principle (DIP), is a document that indicates the amount you can borrow based on your financial information.
However, it is not a formal mortgage offer. The lender will consider your income, outgoings, credit score, and employment status before agreeing to lend you funds.
How Can I Get A Decision In Principle?
If you require a decision in principle quickly, simply submit an inquiry and we'll get in touch with you to arrange it.
We'll provide you with a detailed explanation of the process as it pertains to your specific situation.
Whether you need an AIP urgently to secure a property or have been rejected for a mortgage, we can assist you. Even if you simply want to know how much you can borrow, we've got you covered.
While you can approach a lender on your own, you'll be restricted to their specific products.
Working with an independent broker, on the other hand, allows you to access the best deals available across the entire UK mortgage market.
This is due to the fact that independent brokers have access to every lender and aren't limited to specific mortgage deals.
What Documents Do I Need For A Decision In Principle?
You will be required to submit personal documents before receiving an agreement in principle.
It is a legal obligation for lenders and advisors to validate your personal circumstances and identity.
To facilitate this process, you will need to provide specific documents, including a valid photo ID, proof of address, income and expenditure details, credit card and outstanding debt statements, proof of deposit, and credit reports.
If you have already found a property, your advisor will also require its details, as well as the type of mortgage you intend to apply for.
For further information, refer to our mortgage process .
How Long Is An AIP Valid?
An agreement in principle, commonly known as AIP, typically remains valid for a period of 30 to 60 days, depending upon the lender or broker.
The lenders and brokers may levy varying charges and fees to execute the agreement. In case you fail to find a property before the expiry of your AIP, you can always reapply for another one.
Will An Agreement In Principle Affect My Credit Score?
Most mortgage lenders will check your credit before giving you an Agreement in Principle (AIP). It's important to know that credit checks for an AIP can leave soft footprints on your credit file.
A soft footprint doesn't mean you've applied for credit, while a hard footprint shows that you have applied for a mortgage.
Having multiple footprints on your report can lower your credit score and reduce your chances of getting approved for a mortgage.
That's why it's not recommended to apply with several mortgage lenders in a short period.
Can I Still Obtain A Mortgage In Principle With A Poor Credit Score?
A great credit score doesn’t guarantee you’ll get an agreement in principle. This is because lenders each have their own criteria.
Lenders will also assess your income, employment, mortgage type, and deposit amount in addition to numerous other areas.
A credit check is only part of your mortgage assessment. That said, having a poor credit score can make getting an AIP difficult.
It’s highly advised to use a specialist broker from the start. This is to avoid making multiple applications with lenders which will eventually damage your credit score.
Selecting the correct lender is important in protecting your credit file and securing a great mortgage deal.
Experienced brokers understand each lender’s criteria and can select the most suitable lender that is most likely to accept your application.
Does Having An Agreement In Principle Guarantee A Mortgage?
It's important to note that being approved for an agreement in principle does not guarantee that you will be approved for a mortgage.
The agreement in principle is not the same as a formal mortgage offer, which only happens after you submit a complete application. After the lender agrees on a property, they will make a formal mortgage offer.
There are several reasons why you may be declined a mortgage after an agreement in principle:
- Failing to provide necessary documents like proof of ID or bank statements
- Providing incorrect initial details
- Having too much outstanding debt or credit
- The property not meeting the lender's criteria
- Credit issues between the agreement in principle and the mortgage application
If you have a broker managing your mortgage application, they can help ensure that all your documents are in order before you apply.
They can also check that your application is structured correctly to increase your chances of approval.
What's The Difference Between A Mortgage AIP and Offer?
An agreement in principle is not a guarantee that you will be granted a mortgage. It is merely a preliminary step that determines the amount you are likely to be able to borrow and whether or not your application will be approved.
The formal offer for a mortgage will only be made after a mortgage survey and a full mortgage application have been completed.
However, obtaining an agreement in principle is still a valuable exercise, as most estate agents require proof of an AIP. In fact, it is often seen as the initial step in the mortgage application process.
What Are The Advantages Of Having A Mortgage In Principle?
If you're planning to buy a property with a mortgage, obtaining an Agreement in Principle (AIP) can be highly advantageous.
An AIP provides you with several benefits, including an estimate of your borrowing capacity, enabling you to make precise offers on properties, enhancing your credibility, and boosting estate agents' confidence.
Additionally, an AIP gives you the upper hand in securing a deal, particularly in situations where time is critical.
Having an AIP places you in a superior position compared to other potential buyers who do not possess one.
This article is intended to provide a general understanding of the topic. The contents should not be treated as advice.
Accelerated Finance Limited only considers applications for commercial or investment properties.
Accelerated Finance Limited is not regulated by the financial conduct authority and only provides unregulated loans via our network of lenders. Your property is at risk if you fail to make payments on a Mortgage Contract. Please note that Accelerated Finance Limited and its employees do not give financial advice or recommendations on any product.