An Agreement in Principle is a preliminary step in the mortgage process where a lender reviews basic financial information, typically through a soft credit check, and indicates the amount it may be willing to lend. It is issued before a full application and before any property-specific underwriting takes place. Estate agents and sellers often ask for an AIP to confirm a buyer is in a position to proceed.
Having an AIP does not guarantee that the lender will issue a formal mortgage offer later. When the full application is submitted, the lender carries out a thorough assessment of payslips, bank statements, the property valuation and other factors. If anything does not meet the lender's criteria at that stage, the amount or terms may change or the application may be declined. For example, a buyer who received an AIP based on declared income might see a different outcome if the lender's underwriter views certain income types differently.
An AIP is usually valid for a set period that varies by lender, after which it may be renewed. Renewing can sometimes trigger a further credit search. Buyers should ask their lender or mortgage broker exactly how long the AIP remains valid and whether the credit search conducted is soft or hard, as multiple hard searches can affect a credit score.
Overseas buyers may find the AIP process takes longer due to the additional documentation required to evidence foreign income and identity, making it essential to engage an FCA-authorised mortgage broker experienced with non-resident applications well before making an offer.