What Is an Agreement in Principle and Do You Need One?
Understand what a UK mortgage Agreement in Principle is, how to get one, and whether you need one before making an offer on a property.
What Is an Agreement in Principle and Do You Need One?
When you start house hunting, you'll often hear estate agents ask whether you have an Agreement in Principle. But what exactly is it, and is it really necessary?
What Is an Agreement in Principle?
An Agreement in Principle (AIP) — also called a Decision in Principle or Mortgage in Principle — is a written statement from a lender indicating how much they'd be willing to lend you, based on a basic assessment of your finances. It is not a formal mortgage offer.
How to Get One
You can apply for an AIP directly with a lender or through a mortgage broker. You'll need to provide basic details including your income, outgoings, employment status, and credit history. The lender will run either a soft or hard credit check — ask which one, as hard checks leave a mark on your credit file.
Do You Need One?
While not legally required, an AIP is highly recommended for the following reasons:
- Estate agents take you more seriously as a buyer
- It helps you understand your budget realistically
- It can speed up the mortgage application once you find a property
- Sellers may prefer buyers who already have one
Limitations
An AIP is not a guarantee. The lender will still conduct full checks when you formally apply. Your circumstances or the property itself could affect the final decision. AIPs typically last 60 to 90 days.
