AIP — Agreement in Principle

What is an Agreement in Principle?

An Agreement in Principle (AIP), also called a Decision in Principle (DIP) or mortgage in principle, is a statement from a lender confirming how much they are provisionally willing to lend you. It is based on a basic review of your income, outgoings, and credit history, but it is not a guaranteed mortgage offer.

Why it matters

Having an AIP is valuable for several reasons. Estate agents and sellers take you more seriously as a buyer when you can demonstrate that a lender has reviewed your finances and indicated willingness to lend. In competitive markets, not having an AIP can mean your offer is overlooked in favour of a buyer who does.

An AIP also gives you a realistic picture of your budget before you start viewing properties, preventing the disappointment of falling in love with a home you cannot afford.

How to get one

You can obtain an AIP directly from a lender or through a mortgage broker. The process typically takes 15 to 30 minutes online. You will need to provide details of your income, employment, monthly outgoings, and any existing debts. Most AIPs are valid for 60 to 90 days, after which you would need to reapply.

Soft vs hard credit checks

Some lenders run a soft credit check for an AIP, which does not appear on your credit file and is invisible to other lenders. Others perform a hard credit check, which is visible and, if done excessively, could affect your credit score. It is worth asking which type of check a lender uses before applying, especially if you plan to shop around.

Important caveats

An AIP is not a mortgage offer. The lender can still decline your full application after conducting a thorough assessment of your finances and valuing the property. Circumstances such as changes to your income, new debts taken on after the AIP, or issues with the property itself can all lead to a different outcome at the full application stage.