What Is an Agreement in Principle?

An agreement in principle is a written statement from a mortgage lender indicating that, based on an initial assessment of your financial circumstances, they would be willing to lend you a specified amount. It is not a formal mortgage offer — it is a preliminary indication, subject to a full application, a valuation of the property, and verification of the information you have provided. However, it demonstrates to sellers and agents that you have been assessed by a lender and are a credible buyer.

How Do You Get an Agreement in Principle?

You can apply for an AIP directly with a lender or through a mortgage broker. The process typically involves providing basic information about your income, outgoings, employment status, and the deposit you have available. The lender will carry out a credit check — either a soft search (which does not affect your credit score) or a hard search (which does). It is worth checking which type of search the lender will carry out before applying, particularly if you are applying to multiple lenders.

How Long Does an AIP Last?

Most agreements in principle are valid for between 30 and 90 days. If your AIP expires before you find a property, you can usually renew it. However, if your financial circumstances have changed — for example, if you have changed jobs or taken on new debt — the lender may reassess your position when you renew.

What Does an AIP Mean to Sellers?

For sellers and their agents, an AIP is evidence that you have been assessed by a lender and that a mortgage of the required amount is likely to be available to you. It reduces the risk that the sale will fall through due to mortgage issues. Most estate agents will ask whether you have an AIP before arranging viewings, and some will not accept offers from buyers who cannot provide one.

What an AIP Does Not Guarantee

An AIP is not a guarantee that you will receive a mortgage. The lender's full assessment — which takes place after you have made an offer and submitted a formal application — may reveal issues that were not apparent at the AIP stage. These can include:

• Issues identified during the property valuation
• Changes in your financial circumstances since the AIP was issued
• Information that comes to light during the full credit assessment
• The property being unsuitable for the lender's criteria (for example, a flat above a commercial premises)

Soft vs Hard Credit Searches

When you apply for an AIP, the lender will carry out a credit search. A soft search does not leave a mark on your credit file and cannot be seen by other lenders — it will not affect your credit score. A hard search does leave a mark and can be seen by other lenders. Multiple hard searches in a short period can negatively affect your credit score and may make lenders more cautious. If you are applying to multiple lenders for an AIP, try to use lenders who carry out soft searches at the AIP stage.

AIP vs Full Mortgage Application

An AIP is the first step; a full mortgage application is the second. The full application takes place after you have had an offer accepted on a property. It involves a more detailed assessment of your finances, a valuation of the property, and — if the application is approved — a formal mortgage offer. The formal mortgage offer is the document that confirms the lender will lend you the specified amount on the specified property.