An Agreement in Principle (often shortened to AIP) is a document from a lender that says they are willing to lend you a certain amount of money for a mortgage, based on an initial assessment of your finances.
It’s sometimes called:
- Decision in Principle (DIP)
- Mortgage in Principle
- Lending in Principle
They all mean broadly the same thing.
An Agreement in Principle is not a full mortgage offer, but it’s an important early step if you’re planning to buy a property.
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What does an Agreement in Principle show?
An Agreement in Principle confirms:
- How much the lender may be willing to lend you
- That you’ve passed an initial affordability check
- That you’ve passed a basic credit check (in most cases)
Estate agents and sellers often ask for one before accepting an offer. It shows you’re a serious buyer and financially prepared.
If you’re going for a first-time buyer mortgage, having an AIP can make your offer stronger compared to someone who hasn’t arranged one.
Is an Agreement in Principle a guarantee?
No.
This is one of the most important things to understand.
An Agreement in Principle is based on the information you provide at the time. When you submit a full mortgage application, the lender will carry out:
- A full credit check
- Detailed affordability assessment
- Document checks (payslips, bank statements, tax returns)
- A valuation of the property
If anything changes or doesn’t match the original information, the lender can reduce the loan amount or decline the application.
Think of an Agreement in Principle as a green light to start house hunting — not a legally binding promise.
How does an Agreement in Principle work?
The process is usually straightforward.
You’ll provide details such as:
- Income (salary, bonuses, self-employed income)
- Monthly outgoings
- Existing debts
- Mortgage deposit amount
- Employment status
- Basic personal details
The lender will then assess affordability using their criteria and run either a soft or hard credit check.
If approved, they’ll confirm the maximum amount they may lend.
Many lenders can provide an Agreement in Principle online within minutes.
Does an Agreement in Principle affect my credit score?
It depends on the lender.
There are two types of credit checks:
Soft credit check
- Doesn’t leave a visible footprint for other lenders
- Doesn’t impact your credit score
- Used by many lenders for AIPs
Hard credit check
- Leaves a visible mark on your credit file
- Can slightly impact your score
- Some lenders still use this for AIPs
If you’re shopping around, it’s usually better to use lenders that perform soft searches first. Too many hard checks in a short period can raise concerns.
A broker can help manage this and avoid unnecessary credit searches.
How long does an Agreement in Principle last?
Most Agreements in Principle are valid for 30 to 90 days, depending on the lender.
If it expires, you can usually renew it, provided your circumstances haven’t changed.
If your income, job, debts or credit profile changes, it’s important to update your details before proceeding.
When should I get an Agreement in Principle?
You should consider getting one:
- Before viewing properties seriously
- Before making an offer
- If an estate agent requests proof of affordability
- When you want clarity on your budget
It helps avoid disappointment. There’s little point falling in love with a £400,000 property if a lender is only willing to lend £320,000.
An AIP sets realistic expectations early.
Do I need an Agreement in Principle to make an offer?
Technically, no. But in practice, often yes.
Many estate agents won’t allow you to formally offer without proof that you can obtain a mortgage. Sellers want reassurance that the sale won’t fall through.
In competitive markets, buyers with an Agreement in Principle are taken more seriously.
What if I’m self-employed?
If you’re self-employed, you can still get an Agreement in Principle, but lenders may:
- Ask how many years you’ve been trading
- Base income on average profits
- Consider retained profits if you’re a limited company director
Some lenders are more flexible than others. If you only have one year of accounts, choice may be more limited.
What if I have bad credit?
You can still obtain an Agreement in Principle with:
- Historic defaults
- CCJs
- Missed payments
However:
- The deposit required may be higher
- The interest rate may be higher
- Fewer lenders may be available
Be honest when entering your details. Incorrect information is one of the most common reasons full applications are later declined.
What happens after an Agreement in Principle?
Once your offer on a property is accepted, the next step is to submit a full mortgage application.
At that stage, the lender will:
- Request supporting documents
- Carry out a full credit check
- Arrange a property valuation
- Underwrite the case
If everything checks out, they’ll issue a formal mortgage offer.
Only at that stage is the lender committing to the loan, subject to conditions.
Can my Agreement in Principle amount change?
Yes.
The final loan amount may change if:
- Interest rates move
- Your circumstances change
- The property valuation is lower than expected
- The lender’s criteria change
That’s why it’s important not to stretch your budget right up to the maximum shown on your AIP.
Is an Agreement in Principle free?
In most cases, yes.
Most lenders provide them free of charge. There’s usually no commitment, and you’re not locked into that lender.
Final thoughts
An Agreement in Principle is a simple but powerful step in the mortgage process.
It gives you:
- Clarity on what you can afford
- Confidence when making offers
- Credibility with estate agents
- A smoother path to a full application
It isn’t a guarantee, but it significantly reduces uncertainty early on.
If you’re unsure how much you could borrow, or whether your credit profile will pass initial checks, arranging an Agreement in Principle is often the best place to start.
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