What is a mortgage agreement in principle?

If you've started looking at homes, you've probably seen the phrase "agreement in principle" pop up. It sounds official and a bit daunting — but it's really just an early, friendly nod from a lender. Let me walk you through what it is, in plain English.

So, what actually is it?

A mortgage agreement in principle (AIP) is a lender's early, informal indication of roughly how much they might be willing to lend you. It's based on a quick look at your finances — not a deep dive — so think of it as a first impression rather than a final decision.

You'll hear it called a few different things, and they all mean much the same thing:

• Decision in Principle (DIP)
• Mortgage in Principle (MIP)
• A mortgage promise or lender's certificate

The key word is principle — it's an indication of what could be possible in principle, not a confirmed, cast-iron mortgage.

What it is — and what it isn't

It helps to be clear on both sides, so there are no surprises later.

An AIP can:

• Give you a rough idea of the sort of budget a lender might consider
• Help you focus your house hunt on realistic price ranges
• Show estate agents and sellers that you've done some homework and are a serious buyer

An AIP is not:

• A formal mortgage offer
• A guarantee that your full application will be approved
• A promise of any particular interest rate, deal or amount

The full checks come later, when you make a proper application. An AIP is the opening conversation, not the final word.

How you get one, and what the lender looks at

Getting an AIP is usually fairly quick. A lender (or an adviser on your behalf) will ask for some basic details and run a light check. Typically they'll want to understand:

• Your income and regular outgoings
• How much deposit you have
• The kind of property and roughly what it might cost
• Your general credit history

As a very rough rule of thumb, lenders will often consider lending somewhere in the region of four to four-and-a-half times your income — though this varies a lot by lender and circumstances. Deposits are commonly around 5–10% of the property price as a starting point, and a bigger deposit can open up more options. These are just general market norms, not a quote or a promise about your own situation.

Does getting an AIP affect your credit score?

This is one of the most common worries, and it's a fair one. The answer depends on the type of credit check the lender runs:

• Soft search — a light-touch check that only you can see on your record. It doesn't leave a visible mark for other lenders and, on its own, won't affect your score. Many lenders use a soft search at the AIP stage.
• Hard search — a fuller check that leaves a visible footprint on your credit file. Several hard searches in a short space of time can be a factor lenders notice.

It's worth asking upfront which type a lender uses before you apply, so you can decide with your eyes open. Neither is inherently good or bad — they just do different jobs.

How long it lasts, and what comes next

An AIP is usually valid for a limited period — often a matter of weeks or a few months — and it can typically be renewed if it runs out before you've found a place. Timeframes vary between lenders, so it's worth checking the specific window on yours.

When you do find a home and your offer is accepted, the AIP is just the starting point. The next steps generally involve a full mortgage application, a property valuation, and the lender's underwriting (their detailed assessment) — after which you may receive a formal mortgage offer. Because the full checks are more thorough, a positive AIP doesn't guarantee a full offer will follow.

Do you need one to make an offer on a house?

Legally, no — an AIP isn't a requirement to put in an offer. In practice, though, many estate agents will ask to see one before they take an offer seriously, especially in a competitive market. It's their way of checking that a buyer is likely to be able to fund the purchase.

Whether it's worth getting one at a particular moment really depends on your own plans and where you are in the process — and that's exactly the kind of thing a real adviser can talk through with you.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured against it. This guide is general information, not advice.