If you are a first-time buyer or moving home for the first time in a while, you are probably coming across a lot of unfamiliar mortgage jargon. At YesCanDo Money, we’re all about making mortgages easier to understand. If you’re wondering what an ‘agreement in principle’ is, wonder no more.
A mortgage agreement in principle (AIP) is an official document from a lender showing how much you could borrow in theory. For many buyers, it’s a typical first step in the mortgage application process before they start viewing properties. It is not a guaranteed mortgage offer, but it helps define your budget and shows estate agents you are a serious buyer.
In this blog, we’ll look further into what a mortgage agreement in principle is, how it works, how to get one, how long it lasts, and when to speak to the YesCanDo Money mortgage team.
Why mortgage agreement in principle important?
An agreement in principle (AIP) makes your property search more focused. Rather than guessing what you can afford, you can look at homes that fit your likely budget.
It also gives estate agents reassurance that you are not just window shopping and that you are financially prepared. When it comes to making an offer on a property, this may help set you apart from other buyers.
For a first-time buyer, it can also make the mortgage journey feel less overwhelming. You are not applying for a mortgage straight away, just getting a helpful guide on what’s possible.
Does an agreement in principle mean you will get a mortgage?
An agreement in principle means a lender may be willing to lend based on your initial details, but it isn’t a guarantee or an official mortgage offer.
The lender can still decline your subsequent mortgage application after carrying out detailed checks, reviewing your bank statements and assessing your chosen property.
What does an AIP document include?
An AIP document confirms that the mortgage lender has carried out an initial assessment of your circumstances and that you meet their lending criteria, subject to further checks and a full mortgage application.
The exact format varies, but most AIP certificates include:
- The date of issue and expiry – an AIP usually lasts between 30 and 90 days. If your property search takes longer, you may be able to renew it if your circumstances haven’t changed.
- The amount the mortgage provider may be willing to lend.
- Confirmation that initial affordability and credit checks have been completed.
- Whether the lender used a soft credit check or a full credit check.
It’s not a formal mortgage offer and so doesn’t include details on mortgage repayments or interest rates.
How to get a mortgage agreement in principle
You can get an Agreement in Principle by applying directly with a lender or through a mortgage broker like YesCanDo. We can help guide you towards the best lender for your specific needs and financial situation, which can save you time and hassle in the long run.
Before applying, it helps to gather the basics. You do not usually need as much detail as you would for a full mortgage application, but the lender or broker still needs enough information to assess you properly.
Essential documents for an AIP application
To assess how much you could borrow, the lender will carry out an initial affordability assessment. You will need to supply:
- Photo ID
- Proof of income
- Address history
- Bank statements
- Details of credit commitments, such as loans, cards or car finance
- Details of your deposit and where it’s coming from, e.g., personal savings, a gift or equity from the sale of your current property
Do AIPs affect your credit score?
This is one of the most common questions buyers ask us. It depends on the type of credit check the lender uses: a soft check or a hard check.
Soft vs hard credit checks explained
A soft credit check gives the lender a snapshot of your credit file. It can be seen by you, but it is not usually visible to other lenders and should not affect your credit score.
A hard credit check is more detailed. It is recorded on your credit report and may affect your credit rating, particularly if you have several hard checks in a short period.
It varies by lender. Most lenders use a soft credit check for an AIP because it is only an initial assessment. A mortgage broker can usually tell you in advance which lenders use soft searches and which use hard checks.
What is the criteria for a mortgage AIP?
Every lender’s criteria are unique, which is why it’s important to approach one that is favourable to your circumstances. For example, some lenders have better incentives for first-time buyers, while others may be better for self-employed mortgages, or for those with smaller deposits.
That’s why using a mortgage broker can be beneficial, as they have a broad view of the market and can save you a lot of homework.
AIP validity periods by lender
AIP validity periods can vary, so always check the details before you apply. If your AIP expires, it’s often possible to refresh the application. And it’s important that, if your income, credit score, deposit, employment, or financial situation changes, you refresh your AIP.
| Lender | Validity Period |
|---|---|
| Nationwide | 90 days |
| Accord | 30 days |
| NatWest | 30 days |
| Halifax | 90 days |
| Santander | 90 days |
| Barclays | 30 days |
| Virgin | 90 days |
| Skipton | 30 days |
| Platform, Co-operative Bank | 30 days |
How a mortgage broker can help you with your mortgage application
A mortgage broker can make the process feel far less overwhelming, especially if you are a first-time buyer or have not moved home in a while. They can:
- Explain how much you may be able to borrow
- Compare mortgage deals from a range of lenders
- Help you avoid unnecessary credit checks
- Recommend lenders suited to more unique circumstances
- Estimate your mortgage repayments
- Explain confusing mortgage jargon
- Help prepare documents and paperwork
- Liaise with lenders and estate agents so you don’t have to
Apply for a mortgage in principle with YesCandDo Money
If you’re looking to get an agreement in principle so you can get house hunting, YesCanDo Money can help. Our friendly and qualified mortgage professionals are here to guide you through the process from your first Agreement in Principle to your official mortgage offer.
We will explain your options in plain English, help you understand what you can borrow, and be on hand to answer your questions whenever you need us.
Even better, we are a fee-free mortgage broker, which means no extra cost to you at an already expensive time.
Contact us today, and let’s get started
Frequently asked questions – what is a mortgage in principle?
Is an agreement in principle the same as a decision in principle?
It’s confusing, but all of these terms generally refer to the same thing: an initial indication that a lender may be willing to lend to you, subject to further checks.
- Decision in principle
- Mortgage in principle
- Mortgage promise
- AIP certificate
Can a mortgage application be declined after a decision in principle?
A mortgage can be declined after a decision in principle if the lender’s detailed checks reveal an issue, the property valuation causes concern, or your circumstances change.
At what stage should you get a mortgage in principle?
Ideally, you should get an AIP before you start serious house hunting. It gives you a clear idea of your budget and helps estate agents see you as a serious buyer.
How long does it take from decision in principle to a mortgage offer?
There is no set timeframe from a decision in principle to a mortgage offer, as it largely depends on how quickly you find a property and submit your full mortgage application. Once your application is submitted, it can take anywhere from a few days to several weeks.
Will a decision in principle affect my credit score?
Some lenders use a soft credit check, which doesn’t affect your credit score. Others use a hard credit check that can. Always check with the lender or your mortgage broker before applying.
Can you have multiple agreements in principle?
You can have more than one agreement in principle, but that doesn’t mean you should. It might sound like a good way to compare lenders, but too many applications in a short period can affect your credit file and may make lenders nervous. Instead of taking out multiple AIPs, use mortgage calculators to find out how much you could borrow, and consult a broker who can compare mortgage options for you
