What Is an Agreement in Principle and Do You Need One?

So, what exactly is it?

An agreement in principle (AIP) is a statement from a mortgage lender saying they would, in principle, lend you a certain amount of money to buy a property. You might also hear it called a "mortgage in principle" or "decision in principle". They all mean the same thing.

It is not a formal mortgage offer. It is more like a conditional green light. The lender has looked at the basic information you have given them (income, outgoings, deposit, credit history) and confirmed that, subject to a full application and property valuation, they would be willing to lend.

Why estate agents ask for one

We ask every buyer whether they have an AIP, and there is a good reason for it. When a seller accepts an offer on their home, they need to feel confident the buyer can actually complete the purchase. A buyer without any proof of borrowing capacity is a risk.

In our experience, buyers with an AIP are taken more seriously by sellers, particularly when there are multiple offers on the table. If two buyers offer the same price but only one has a mortgage agreement in principle, the seller will almost always go with the prepared buyer. It signals that you have done the groundwork and are ready to move.

From our side as agents, it also helps us match you with the right properties. If we know your budget is confirmed at £200,000, we can focus your viewings on properties that are genuinely within reach rather than wasting your time (and the seller's) on properties you cannot afford.

How to get one

There are two routes. You can go directly to a bank or building society, or you can use an independent mortgage adviser.

Going direct is fine if you already know which lender you want to use. But an independent adviser will search across the market for you, comparing products from dozens of lenders to find the best fit. CGR Financial is independent and FCA-regulated, with access to a wide range of products from across the market. They can usually get an AIP sorted within 24 hours.

You will need to provide some basic information: your income (salary, any bonuses or overtime), your monthly outgoings, your deposit amount, and consent for a credit check.

Does it affect your credit score?

This is one of the most common questions we get. The answer depends on the lender.

Most lenders now use a "soft" credit search for AIPs. A soft search does not appear on your credit file and will not affect your score. Other lenders still run a "hard" search, which does leave a footprint. Multiple hard searches in a short period can look bad to future lenders.

Your mortgage adviser will know which lenders use soft searches and can steer you accordingly. This is one of the advantages of using an adviser rather than applying direct to several banks yourself.

How long does it last?

Most AIPs are valid for 60 to 90 days, depending on the lender. After that, you would need to renew it, which usually just means confirming your details have not changed.

If your circumstances change significantly during that period (you change jobs, take on new debt, or your deposit amount changes), the AIP may no longer be accurate. It is always worth updating your adviser if anything shifts.

What happens after the AIP?

Once you find a property and have your offer accepted, you move to a full mortgage application. This is a more thorough process. The lender will verify everything you told them during the AIP stage: they will want payslips, bank statements, proof of deposit, and ID documents. They will also arrange a valuation of the property you are buying.

Having an AIP does not guarantee the full mortgage will be approved. Issues can arise if the property valuation comes back lower than expected, if your circumstances have changed, or if something flags during the deeper checks. But for the majority of buyers, the transition from AIP to full offer is straightforward.

For more detail on what documents you will need at the full application stage, see our guide to the documents needed to buy a house.

Common misconceptions

"I need to find a property before getting an AIP." No. In fact, the opposite is true. Get your AIP first, then start viewing. It puts you in a much stronger position.

"An AIP means I have to use that lender." Not at all. An AIP is not binding on either side. You can get AIPs from multiple lenders (ideally through an adviser to manage the credit search issue) and choose the best deal when you are ready to apply.

"My AIP amount is what I should spend." Not necessarily. Just because a lender will offer you £220,000 does not mean you should borrow all of it. Budget for a comfortable monthly payment with room for rate rises and unexpected costs.

Our advice

Get your AIP sorted before you start viewing properties. It costs nothing, takes very little time, and puts you in the strongest possible position when you find somewhere you want to buy. We see too many buyers fall in love with a property and then scramble to get their finances in order. By the time they are ready, someone else has beaten them to it.

If you are ready to start looking, have a browse through our properties for sale. And if you need help getting your AIP, CGR Financial can talk you through it. Our first-time buyer's guide and first-time buyer mortgage guide cover the rest of the process in detail.