What is a mortgage in principle?
A mortgage in principle, also known as an ‘agreement in principle’ (AIP), ‘decision in principle’ or ‘mortgage agreement in principle’, is an indication that a lender could lend you a specified amount, based on details you’ve provided about your income, spending and debts.
You should be able to get a mortgage in principle for free. With our partners at Mortgage Advice Bureau, you can get a personalised Decision in Principle today. Getting a Decision in Principle from Mortgage Advice Bureau won’t impact your credit score. There’s no obligation to proceed with the deal they find you, but it gives you a good indication of how much you can borrow.
Arrange your Mortgage Decision in Principle today with the mortgage experts at Mortgage Advice Bureau
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Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
How to get your Decision in Principle today
Getting a Decision in Principle is simple. The easiest way to get one is via Mortgage Advice Bureau. They will search over 100 lenders’ criteria and check which deals you could qualify for, how much you may be able to borrow and how much it might cost.
What happens after you have a mortgage decision in principle?
You can now view and make an offer on a property, confident you have proof of funds. Once you’ve found the property you want to buy and had an offer accepted, go back to your broker to start the formal mortgage application process.
The seller’s estate agent may suggest you use a mortgage broker recommended by them. But there are lots of reasons why this is a bad idea, not least that you might not get the best deal. Find out more in our guide on Do I have to use an estate agent’s mortgage advisor?
It can typically take from two to four weeks to get a mortgage approved. But it can take longer, depending on your circumstances.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
When should you get an AIP?
It’s a good idea to have a mortgage agreement in principle (AIP) before you seriously begin house-hunting and before making an offer on a property or if you need a mortgage to buy an auction property.
Why do I need an agreement in principle?
Having a mortgage agreement in principle (AIP) can help speed up the home-buying process, as you will have an indication of how much you can borrow. Having evidence of this also makes you a more appealing buyer. It will give a seller and their estate agent confidence that you’re serious about the purchase.
A mortgage in principle is also useful for borrowers who are worried about meeting a lender’s eligibility criteria. Going through the initial checks early will give a sense of whether you’re likely to be accepted or not. If you’re rejected, it gives you the chance to reassess your financial situation before you start house hunting.
Do you need a mortgage in principle to make an offer?
No, a mortgage in principle is not required to make an offer on a house. However, having one can make you a more attractive buyer as it shows sellers that you’re financially capable of purchasing their property.
Plus, it’s advisable to speak to a broker about your finances before you start house-hunting so this is part of that process.
Note that in Scotland, a mortgage in principle is needed for an offer to be taken seriously.
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What do I need for a mortgage agreement in principle?
To get a mortgage in principle, you’ll need to supply various details about yourself and anyone else you’re buying a property with. These include:
- Personal details, including your name and date of birth .
- Addresses for the past three years.
- Details of your income and monthly outgoings.
How long does an Agreement in Principle last for?
An Agreement in Principle typically lasts for 30-90 days. If you don’t find a property within this time, you may be able to renew it. Or you may need to apply for a new Agreement in Principle.
Is an AIP different to a mortgage calculator?
Yes. A mortgage affordability calculator is a great way to get a quick idea of how much you may be able to borrow, but it’s not as personalised. Your AIP is also a formal document that you can use when you’re considering on making an offer for a property.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau. Compare deals or speak to an adviser today.
Need mortgage advice?
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Get mortgage advice now
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
What if I don’t pass eligibility checks?
If your first decision in principle is refused, it doesn’t mean you can’t get a mortgage with another lender. But, it is important to understand why you didn’t meet the eligibility criteria. Ideally, you would resolve these issues before you try again. Being in the strongest financial position increases your chances of securing the most competitive mortgages.
The best course of action is to speak to a mortgage broker who should be able to help. They know which lenders are most likely to accept you, and may be able to steer you towards an acceptance.
Your rejection may be down to a poor credit rating. If this is the case, see our guide on Mortgages for Bad Credit to understand your options.
How reliable is a mortgage in principle?
A mortgage in principle does not guarantee that your application for a mortgage will be accepted. Nor does it make any guarantees about the amount that you can borrow. That’s because the initial checks are limited and the lender doesn’t have a full view of your financial situation. Furthermore, the lender needs to make sure that your circumstances haven’t changed since the initial conversation.
This benefits buyers too as it doesn’t commit you to taking out a mortgage with the lender offering the agreement in principle. You still have the option of investigating mortgage options further, if you wish to.
Can I get more than one AIP?
Yes, you can have multiple Agreement in Principles. Having an AIP with NatWest doesn’t stop you getting another from a different lender. However, the quickest way to search multiple different lenders is to use a broker.
Mortgage declined after agreement in principle: What next?
If your mortgage application is declined after you’ve had an agreement in principle, go straight back to your mortgage broker to discuss your options. And you’ll find more information in our guide Mortgage declined? Here’s what to do next.
Can you get a mortgage agreement in principle when you’re a first-time buyer?
Yes, if you’re a first-time buyer, estate agents will often encourage you to get a mortgage in principle because it reassures everyone that you’re able to buy.
