Agreement in Principle

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Agreement in Principle (Part 1)

Jemma Dean explains how an Agreement in Principle works. Episode one of two, recorded in July 2025.

Podcast approved by The Openwork Partnership on 21/08/2025.

What is an Agreement in Principle?

It’s a document that the lender provides, highlighting how much in principle you can afford to borrow. The lender carries out an initial assessment, based on your financial information such as income and expenditure. It’s not a formal offer, but it helps you understand your potential borrowing power.

What are the other names for an Agreement in Principle?

It can also be called a Mortgage Promise, Mortgage in Principle or Decision in Principle (DIP). Agreement in Principle can also be shortened to AIP.

What do I do if my estate agent is asking to see my Agreement in Principle? How do I get one?

It is a standard part of the buying process. To an estate agent, it shows that you’re more prepared and already one step ahead of the game. You come across as a more serious buyer, because when you make an offer, you haven’t plucked the number out of the air.

To get an AIP, you will have carried out a financial review, either directly with the lender or your mortgage broker, and provided the required documents.

If you are showing your Agreement in Principle to an estate agent, it can be a good idea to redact some of the information on it. You could have an Agreement in Principle approved for £500,000, but you’re offering £470,000.

An estate agent could then see that you can offer more, which would increase their commission. They may therefore put pressure on you to make a higher offer, knowing that you can meet that. So be careful in what you show them.

There are alternatives to providing an Agreement in Principle, too. You can have your mortgage broker call the estate agent to confirm a financial review has been done and that the offer is affordable.

The estate agent may also have an in-house mortgage broker who can confirm, based on a brief review of your income and other financial commitments, that the loan is acceptable and affordable.

Do I have to have an Agreement in Principle through the estate agent I’m looking to purchase through?

No. The estate agent may push you to use their broker to produce an Agreement in Principle. There’s no benefit to you here – you can find your own broker if you prefer. You might wish to work with a broker that’s been recommended to you, you’ve got a rapport with, or that’s in a convenient location.

Ultimately I suggest you find a broker with access to a wide range of lenders that you can build up trust with over time.

How reliable is an Agreement in Principle? How long does an AIP last?

An Agreement in Principle lasts between 30 to 90 days, depending on the mortgage lender. It’s not a guarantee of a mortgage offer, but it’s fairly reliable if the information you’ve initially submitted is complete and accurate – and the type of property and its value is acceptable to the lender.

It may affect your Agreement in Principle if the information you provide is not quite accurate. It’s best to be as honest as you can and provide lots of detail.

For an Agreement in Principle we need your personal information, income details and expenditure. In reality, people’s circumstances do change, which can mean the original Agreement in Principle is no longer reliable in terms of your ability to get a mortgage.

Also, sometimes people forget things. There could be a payment default six months ago, or a credit card balance you’re not aware of.

Can I make an offer with an Agreement in Principle?

Yes, certainly you can. The Agreement in Principle will have your maximum lending amount on it, so you can offer up to that amount.

Does an AIP mean you’ll get a mortgage?

Yes, depending on the accuracy of the information that was input in the first place. But this is the beginning of the process – an underwriter will still assess your documentation and mortgage valuation. But an Agreement in Principle is certainly a good indication.

Will I need a credit check? Does an AIP or a DIP affect credit score?

Generally, yes, an Agreement in Principle will involve a soft credit check. A lender will take a quick look at your credit report and it doesn’t affect your credit score – so you can do this as much as you want.

How do I apply for an AIP? How long does this process take?

You can go directly to a lender to apply for an AIP, but preferably you would go through a mortgage broker to do this for you. It’s very quick. Once the application’s gone off, it takes no longer than 30 minutes, but it’s often less time than that.

Sometimes your AIP can be referred, which means that they need to do a manual check. This can take a little bit longer. Your mortgage broker will go through things with you if that happens.

Do you have anything to add before we come back with part two?

Just that a mortgage broker has access to multiple lenders and will advise you and guide you through the process. We hold your hand – because this is a big deal. You’re taking out a large loan, so work with an expert.

Not all lenders are the same. Some will look at overtime differently, or your bonus, credit rating, and so forth. A mortgage broker will know where to place you and won’t waste your time.

If you’re on your own, applying with many different lenders could impact the property that you’re going to purchase. So go with someone who you trust, you’ve built up a rapport with, and it should be a smoother ride.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Approved by The Openwork Partnership on 21/08/2025.

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Agreement in Principle (Part 2)

Jemma Dean continues the conversation on how an Agreement in Principle works. Episode two of two, recorded in July 2025.

Podcast approved by The Openwork Partnership on 29/08/2025.

When should I get an Agreement in Principle (AIP)?

Anytime, really. Some people like to do it before they start looking for a property. Others do it during the process and some after they make an offer. It depends on your preferences.

What information do I need to get an Agreement in Principle?

You need to have carried out a financial review with your mortgage broker or lender and supply the documents they’ve requested.

Generally, for an Agreement in Principle, we need your date of birth, current address, income details, current expenditure, outgoings and credit commitments, and the total amount of your savings.

A good tip is to have your credit report to hand, just because sometimes you can forget some information. Your credit report gives a good overview of everything.

Is an Agreement in Principle guaranteed? Can my mortgage be declined after an Agreement in Principle?

It’s a good indicator, but that does depend largely on the accuracy of the information that you provide. If there’s a change in your income details or your current circumstances, then it’s not reliable. That’s why it’s so important to declare everything right from the beginning.

A mortgage can be declined after an Agreement in Principle. It may be that the product you picked is no longer suitable, or the information you’ve submitted includes something that the lender won’t accept.

Can I get an Agreement in Principle if I’m a First Time Buyer?

Yes – you can get an Agreement in Principle if you’re a First Time Buyer, a home mover or a landlord purchasing a Buy to Let.

How will bad credit affect an Agreement in Principle?

Bad credit can make it harder to obtain an Agreement in Principle, but it’s not necessarily a barrier. Lenders consider various factors beyond just your credit score, including severity, how recent the credit issues were, whether debts have been repaid and your overall financial situation.

It may reduce the lenders available to you, because some have stricter lending criteria and it’s harder to qualify with them. You’ve also got the potential of higher interest rates and fees to compensate for the risk associated with bad credit. You may find you need a larger deposit than the typical 5% or 10%.

A lender may have concerns about your credit worthiness and your application may be rejected. If that happens, you may just need to give it time before applying for a mortgage again, and address the issues on your credit report.

Is it harder to get an Agreement in Principle if I’m self-employed?

It’s not necessarily harder. Lenders just want to see stability. An employed individual receives a regular monthly income, so a lender is quite happy to see three months’ payslips and those payments going into a bank.

If you’re self-employed, they want to know the history of your business. The income of a self-employed individual can fluctuate from time to time – which can be both a pro and a con.

Lenders may require two to three years’ accounts or tax year overviews, SA302s and bank statements. However, there are lenders out there that only require one year. Some lenders will want a longer trading history and for your business to have been established for a particular amount of time.

It’s not harder to get an Agreement in Principle if you’re self-employed – it’s just that more information may be requested from you. But this is something your broker should have requested right from the beginning, so that when you submit your mortgage application it’s nice and smooth.

I’ve been declined an Agreement in Principle. What can I do? What happens next?

Firstly, don’t panic. It doesn’t mean you can’t get a mortgage elsewhere. It’s an opportunity to reassess and improve your application. Seek clarification – there’s a reason why it’s been declined. It could be as simple as human error, where an incorrect figure has been put in. That’s a simple thing to change.

You may want to review your finances. It could be that you haven’t declared everything, which is why it’s good to review your credit report before doing an Agreement in Principle.

If you’ve gone directly to a lender, go to a mortgage broker – perhaps that lender is not the most suitable one for you. A mortgage broker can guide you to another one.

You may just need to give it time and address some credit issues, reduce some debts or pay back some defaults under your name. You can explore different lenders or a smaller loan amount. It could be that there’s an issue with the property.

Be patient, don’t panic – just carefully reassess the reason why it’s declined.

What are the benefits of getting an AIP with a mortgage broker like Aitana Financial Services?

The benefits with a broker are much greater than going directly with a lender. We know the market – and it does change. Lenders’ criteria changes and you may not be aware of it. We know who to place you with once we’ve done our financial review.

Generally, it’s a smoother, quicker process. You don’t have the stress of communicating with the lender because we’ll have all the information on the AIP ready for the mortgage application.