Agreement in Principle | The Mortgage Dog
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Your home may be repossessed if you do not keep up repayments on your mortgage.
WHAT IS AN AGREEMENT IN PRINCIPLE?
An Agreement in Principle, often shortened to AIP, is the first formal step in getting a mortgage. It is a written confirmation from a lender that, based on an initial assessment of your finances, they would be willing to lend you a certain amount of money towards buying a home.
You might also hear it called a Mortgage in Principle, a Decision in Principle, a DIP, or a Mortgage Promise. They all mean the same thing. Different lenders use different names for it, but the purpose is identical.
An Agreement in Principle is not a guarantee that you will get a mortgage. It is not a binding offer from a lender, and it is not the same as a full mortgage application. Think of it as a very strong indicator, a signal from a lender that says your finances look right on paper and they would be happy to look at you seriously when you find a property and make a full application. We also wrote a blog on what is an agreement in principal.
WHY DO YOU NEED AN AGREEMENT IN PRINCIPLE?
There are several really good reasons to get your Agreement in Principle sorted before you start seriously looking at properties.
Estate agents will almost always ask for one before they let you view properties or before they will accept an offer. It shows them you are a serious buyer who has already taken steps to confirm you can get a mortgage. Without one, some agents will not entertain your offer, especially if there are other buyers in the running.
It gives you a clear picture of your budget. Rather than falling in love with properties you cannot afford, an AIP tells you exactly where you stand and what price range you should be looking in. That saves time, energy, and quite a lot of disappointment.
It speeds up the process once you find the right home. Having your Agreement in Principle already in place means you can move quickly once your offer is accepted, which sellers and estate agents always appreciate.
In Scotland, you are required to have a mortgage in principle before you can submit a formal bid on a property, so it is not optional there at all.
HOW DOES AN AGREEMENT IN PRINCIPLE WORK?
The process is straightforward. A lender or broker takes some basic information about your finances, including your income, your regular outgoings, any existing credit commitments, and your address history for the last three years. They carry out a soft credit check, which does not leave a mark on your credit file and does not affect your credit score in any way. Based on that information, they confirm how much they would be prepared to lend you.
The whole thing typically takes between 10 and 30 minutes, and you will usually get a decision the same day, often within minutes.
Once you have it, an Agreement in Principle is typically valid for between 60 and 90 days depending on the lender. If you have not found a property in that time, you can usually renew it without starting from scratch.
WHY GET YOUR AGREEMENT IN PRINCIPLE THROUGH THE MORTGAGE DOG?
When you get an Agreement in Principle through us, we are not just checking what one lender would offer you. We assess your situation against the whole market. That means we can tell you not just how much you could borrow, but which lenders are most likely to say yes based on your specific circumstances, and at what rate.
This makes a real difference. If you have a complex income, are self-employed, have had past credit issues, or are buying a non-standard property, some lenders simply will not consider you. Others will be very comfortable with exactly your situation. We know which is which, and we make sure your Agreement in Principle comes from a lender who is genuinely likely to approve your full application when the time comes.
We are based in Washington, Tyne and Wear, and we have been helping people across the North East and the whole of the UK get the right mortgage since 2017. We have arranged over £207 million in mortgages for our clients, and we know this process inside out.
Getting your Agreement in Principle through us is free, takes no more than 30 minutes, and will not affect your credit score. We can usually get it done the same day.
DOES AN AGREEMENT IN PRINCIPLE AFFECT YOUR CREDIT SCORE?
No. A proper Agreement in Principle carried out with a soft credit check will not affect your credit score at all. Soft searches do not appear on your credit report in a way that other lenders can see, so they have no impact on your ability to borrow.
The only time a credit check affects your score is when a full mortgage application is made, which involves a hard credit search. That only happens later down the line when you have found a property and are ready to go ahead.
It is worth knowing that some lenders do carry out hard credit checks for their Agreement in Principle rather than soft checks. If you apply to multiple lenders directly, you could end up with several hard searches on your file, which can affect your score. This is one of the key reasons that going through a broker is better than approaching lenders individually. We carry out the necessary checks in a way that protects your credit file.
AGREEMENT IN PRINCIPLE VS MORTGAGE OFFER: WHAT IS THE DIFFERENCE?
These two things sound similar but they are quite different and it is worth understanding the distinction.
An Agreement in Principle is based on limited information you provide about your finances. It is a quick initial assessment that gives you and estate agents a rough confirmation of your borrowing capacity. It is not binding on either side.
A Mortgage Offer is the official, legally binding document that comes after a full mortgage application. At that point the lender will have carried out a full credit check, verified your income with payslips or accounts, and had the property independently valued. A mortgage offer means the lender is genuinely committed to lending you the money for that specific property.
To put it simply, an Agreement in Principle gets you through the door. A Mortgage Offer gets you the keys.
WHAT INFORMATION DO YOU NEED FOR AN AGREEMENT IN PRINCIPLE?
You will typically need the following to hand when we apply for your AIP:
Your income details, including salary, any bonuses, overtime, or additional income sources.
If you are self-employed you will need a rough idea of your last two years of income.
Your regular monthly outgoings, including things like car finance, credit card payments, loans, and any other regular financial commitments.
Your address history for the last three years.
Your National Insurance number.
Your deposit amount and where it is coming from.
That is roughly it for the initial stage. We will walk you through everything when we speak so you do not need to have it all prepared before you call.
READY TO GET STARTED?
If you are thinking about buying a home in the North East or anywhere else in the UK, getting your Agreement in Principle sorted is the best first step you can take. It costs nothing, takes less than 30 minutes, will not affect your credit score, and puts you in a much stronger position when you find the right property.
Get in touch with The Mortgage Dog today and we will get it sorted for you.
STILL NOT SURE?
Frequently Asked Questions
Decision in Principle FAQs
How long does an Agreement in Principle last?
Most Agreements in Principle are valid for between 60 and 90 days. After that they typically expire and you would need to renew. Renewing does not usually require starting from scratch and will not affect your credit score as long as soft searches are used throughout.
Can I get an Agreement in Principle if I have bad credit?
Yes, in many cases. We work with specialist lenders who consider applicants with past credit issues including missed payments, defaults, and even previous CCJs. The key is matching you with the right lender from the start rather than approaching lenders who will automatically decline you, which protects your credit file and saves time.
Can I get an Agreement in Principle if I am self-employed?
Yes. Self-employed applicants can absolutely get an Agreement in Principle. We work with lenders who are experienced with sole traders, contractors, and limited company directors. We know how to present your income in the way that gives you the strongest possible result.
Does an Agreement in Principle mean my mortgage is guaranteed?
No. An AIP is an indication based on the information provided at that stage. When you make a full mortgage application the lender carries out more detailed checks and a full credit search. In some cases the final offer may differ from the AIP, but if your circumstances have not changed significantly and the information was accurate, most AIPs do lead to successful full applications.
How quickly can you get me an Agreement in Principle?
In most cases we can get your Agreement in Principle sorted on the same day. Once we have spoken to you and gathered the necessary information, we work quickly. We know that in a competitive property market, speed matters.
Will I need a new Agreement in Principle for every property I make an offer on?
No. Your Agreement in Principle covers a maximum borrowing amount rather than a specific property. As long as it is still valid and the property you want to buy falls within that amount, you can use the same one. You will only need a new one if your existing AIP expires or if your circumstances change.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
There may be a fee for arranging a mortgage and the precise amount will depend on your circumstances. This will typically be between £299-£699.
The Mortgage Dog Ltd (FCA Number 788976) is an Appointed Representative of Stonebridge Mortgage Solutions Ltd, which is authorised and regulated by the Financial Conduct Authority. The Mortgage Dog Ltd. is registered in England and Wales under company number 12306191 at the registered address 41a Spout Lane, Washington, NE38 7HP. Not all Buy to Let Mortgages are regulated by The Financial Conduct Authority
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