Mortgage in principle everything you need to know

An Agreement in Principle (AIP), which is also known as a Decision in Principle or Mortgage in Principle, is the official statement from a mortgage lender. It states that, according to the basic information provided to them, the lender would lend a certain amount to the potential borrower.

What is it used for?

Agreements in Principle gives sellers and estate agents the confidence to that you can afford to purchase a house.

Do I need one?

It is not compulsory to get an AIP, but it could help you appear as a more attractive home buyer if you have one.

How long does it last?

Decisions in Principle usually last between 30-90 days. If you need an AIP after the expiry date, you will have to apply again.

Will it affect my credit score?

Lenders will do a credit search when issuing agreements in principle. Some will do a hard search, where the search is easily seen to lenders on your credit report. While most lenders will do a soft search, where lenders will not be able to see on your report.

Having too many searches of your credit report in a short period of time will have a negative affect your credit rating. While buying a house you are only likely to receive one search, so this is unlikely to be an issue

Does it guarantee my mortgage?

Not at all, it is an initial approval based on basic information.

To receive a full mortgage offer, a lot more information is taken to consideration, such as:

• The valuation and acceptability of the property

• Approval from an underwriter

Does it guarantee the mortgage interest rate?

Unfortunately not. With very few exceptions, a lot of lenders do not allow you to reserve a mortgage product or interest rate until a full application is made.

In summary:

What an AIP does:

• Give evidence that you can afford a home you want to buy theoretically

• Give sellers confidence about your affordability

• Tells you how much you can afford to borrow

What an AIP does not do

• Guarantee you can obtain a mortgage

• Guarantee how much you can borrow after expiry

If you would like to speak to one of our expert mortgage advisers, you can get in touch by calling us on 0208 191 0007 or by emailing us at


Azembel Ltd is a Trading style of TMG Limited, which is authorised and regulated by the Financial Conduct Authority. Registered address 71-75 Shelton Street, Covent Garden, London, WC2H9JQ Registered No. 786245.