An Agreement in Principle (AIP) is a written statement from a mortgage lender confirming that, in principle, they would lend you a certain amount based on initial checks of your income, outgoings and credit history. It is sometimes called a Mortgage in Principle or Decision in Principle, though some lenders draw a subtle distinction between the two.
Obtaining an AIP does not guarantee you will receive a mortgage. It simply gives you a realistic idea of your budget and demonstrates to estate agents and sellers that you are a serious buyer. Most AIPs involve a soft credit check, meaning they do not leave a visible footprint on your credit file, although some lenders still perform a hard search.
An AIP is typically valid for 60 to 90 days depending on the lender. If it expires before you find a property, you can usually request a new one. Once you have found a property and wish to proceed, you will submit a full mortgage application, at which point the lender carries out more detailed affordability and identity checks.
You are looking to buy your first home. Before viewing properties, you apply for an AIP online. The lender confirms it would lend you up to £250,000, which helps you set a realistic budget and shows estate agents you can afford the homes you are viewing.
Key Points
- Not a binding commitment from the lender or from you
- Usually valid for 60 to 90 days
- Most lenders use a soft credit search, but some may perform a hard search
- Strengthens your position when making an offer on a property
- You still need to pass a full application and affordability assessment to get a mortgage offer