What Is an Agreement in Principle? Complete AIP Guide 2026

What Is an Agreement in Principle?

An Agreement in Principle, usually called an AIP, and sometimes still referred to by the old name "Decision in Principle" or DIP, is a lender's statement that they're willing to lend you a certain amount of money, subject to certain conditions.

It's not a mortgage offer. It's not a guarantee. It's a preliminary thumbs-up from a lender saying: based on the information you've given us, we think we can help you.

AIPs were introduced by the FCA in 2017. Before that, lenders would issue "mortgage in principle" letters which often had very little meaning. The AIP is more rigorous, lenders must do a proper affordability assessment and a credit check before issuing one.

AIP vs Mortgage Offer: What's the Difference?

This confusion trips up a lot of first-time buyers, so let's be absolutely clear.

Do You Need an Agreement in Principle?

Short answer: not technically, but it's very sensible to get one before you start house hunting.

Why You Should Get One

• It shows sellers you're serious: A property with multiple offers is a common situation in 2026. An AIP signals that you're a credible buyer with financing in place
• It gives you budget clarity: You'll know exactly how much you can borrow, so you don't waste time looking at properties outside your range
• Estate agents take you seriously: Without an AIP, agents may be less responsive or less helpful
• It's quick and free: Most lenders can provide one within 30 minutes to a day
• It's a soft credit check: Unlike a hard application, it doesn't damage your credit score

When You Might Skip It

• You're a cash buyer (no mortgage needed)
• You already have a mortgage in principle from when you previously applied
• You're absolutely certain of your financial position and don't need guidance on affordability

How to Get an Agreement in Principle

The process is straightforward:

1. Choose a lender or broker: You can apply direct with a bank or building society, or use a mortgage broker who can submit to multiple lenders
2. Provide basic information: Income, expenses, existing debt, employment status, and savings
3. Submit documents: Recent payslips (typically 2 to 3 months), proof of ID, and sometimes bank statements
4. Credit check: The lender runs a soft credit check (this doesn't affect your score)
5. Affordability assessment: The lender calculates how much you can borrow based on their criteria
6. AIP issued: You receive a letter or digital document stating the maximum they'll lend

The whole process typically takes a few hours to one working day. Many lenders now offer instant or same-day AIPs if you apply online.

What Does an AIP Actually Contain?

A typical AIP will state:

• Your name and address
• The maximum amount the lender will consider lending you (e.g., "up to £250,000")
• The validity period (e.g., "valid for 3 months")
• The property type (e.g., "detached house, flat, semi-detached")
• Any conditions or caveats (e.g., "subject to satisfactory survey", "subject to confirmation of employment")
• Whether it includes joint applicants and their names

What it won't say is a specific interest rate, that comes later when you've found a property and made an offer.

How Much Confidence Should You Put in an AIP?

An AIP is a good indicator that a lender can help you, but it's not a guarantee. The lender can withdraw the AIP if:

• Your financial circumstances change significantly (you lose your job, rack up new debt)
• You provide false information on the application
• New information comes to light in a credit check when you formally apply
• The property you choose to buy is significantly below the valuation the lender expects
• You miss the AIP expiry date and don't renew it

AIPs and Property Searches: The Timeline

Here's how AIPs fit into the home-buying timeline:

1. Week 1: Get your AIP, Apply with a lender, get your AIP, know your budget
2. Weeks 2 to 8: Search for properties, Armed with your AIP, you can make offers with confidence
3. Week 9: Make an offer accepted, Your AIP shows the seller you're serious
4. Week 9 to 12: Formal application, You apply for a formal mortgage offer on the specific property
5. Week 12 to 16: Surveys and valuations, The lender's surveyor values the property
6. Week 16: Mortgage offer issued, The formal offer replaces the AIP
7. Week 17 to 24: Conveyancing and completion, Lawyers exchange contracts and you complete

Multiple AIPs: Should You Apply With More Than One Lender?

Many buyers wonder if they should get AIPs from multiple lenders to compare rates and terms.

The answer: you can, but be strategic. Each full mortgage application involves a hard credit check, which does temporarily impact your score. An AIP involves only a soft check, which doesn't affect your score. So:

• Getting AIPs from 2 to 3 lenders is fine and common
• Soft checks don't damage your score
• Once you've decided on a property, apply formally with just one lender (or use a broker who can submit to multiple lenders simultaneously)
• Avoid multiple full applications within a short timeframe, lenders see this as desperation

Using a Mortgage Broker vs Applying Direct

You can get an AIP by applying direct with a bank or building society, or through a mortgage broker.

Direct Application

Quick, straightforward, but you only get one lender's perspective. Good if you have an existing relationship with a bank.

Mortgage Broker

Brokers can submit your application to multiple lenders simultaneously, giving you more options and often better rates. They are paid a commission by lenders, and some also charge their own broker fee, so it is worth asking upfront what, if anything, you will pay. They're particularly useful if you have a complicated situation (self-employed, poor credit history, etc.).

What to Do When You've Got Your AIP

Once you have your AIP, you're ready to start house hunting seriously.

• Don't exceed your AIP amount: Just because you've been approved for £300,000 doesn't mean you should spend it all
• Factor in fees and costs: Your AIP is for the mortgage only; you'll also need to pay survey, conveyancing, and other fees
• Set a property search budget lower than your AIP: Many buyers search for properties at 90 to 95% of their borrowing limit
• Keep the AIP safe: You'll need to show it to the seller when you make an offer
• Renew it if it expires: AIPs are valid for 1 to 3 months. If your search takes longer, you can request a renewal
• Don't make major financial changes: Don't take out new credit, change jobs, or make large purchases while your AIP is active

From AIP to Mortgage Offer: What Happens Next

Once your offer on a property has been accepted, you move from the AIP stage to the formal mortgage application stage.

At this point, the lender will:

• Require a full application form (more detailed than the AIP)
• Commission a professional valuation of the property
• Perform additional affordability checks
• Request further documentation (property details, survey, etc.)
• Run a hard credit check (which may temporarily lower your score slightly)

If everything checks out, the lender issues a formal mortgage offer, which replaces your AIP. This offer is legally binding, the lender must lend, and you must borrow (assuming you meet the conditions).

Common AIP Questions Answered

Does an AIP affect my credit score?

No. An AIP uses a soft credit check which doesn't affect your score. The hard check comes later with the formal mortgage application.

How long is an AIP valid for?

Typically 1 to 3 months. Check your letter. Most lenders allow you to request a renewal if you haven't found a property in time.

Can my AIP be withdrawn?

Yes, if your circumstances change significantly or if you provide false information. But in normal circumstances, if your financial situation stays stable, it shouldn't be.

Do I have to use the same lender for the formal mortgage?

No. The AIP is just confirmation they can lend to you. You're free to apply for the formal mortgage with a different lender if you wish.

What if I'm turned down for a formal mortgage after getting an AIP?

It's rare, but possible. Usually only if something significant changes or new information comes to light during the formal application.

Key Takeaways

• An AIP is a lender's preliminary statement that they can help you, it's not a guaranteed mortgage
• Get one before you start house hunting; it's free, quick, and shows sellers you're serious
• An AIP is valid for 1 to 3 months; keep track of the expiry date
• Don't confuse an AIP with a formal mortgage offer, they're different things
• An AIP is based on a soft credit check, which doesn't affect your score
• You can get AIPs from multiple lenders to compare, but avoid multiple full applications
• Once you've found a property, the formal mortgage application process begins