What Is a Mortgage Agreement In Principle?
Author: Jack Freestone
Finance Writer at Boon Brokers
Reviewed by: Gerard Boon
Managing Director at Boon Brokers
A Mortgage Agreement in Principle (AIP) is a documented estimate of how much a lender may be willing to lend you based on your financial circumstances. It is not a formal mortgage offer and does not guarantee that your application will be approved.
Whether you’re already searching for different properties or are simply dipping your toe into the world of mortgages, at some point during every home-buying journey there is one question that needs answering: “How much can I borrow?”
This is where a mortgage agreement in principle can help. Issued by your chosen lender, an AIP provides an estimate of how much they could be willing to lend you, based on your current financial circumstances.
In this article, we explain everything you need to know about a mortgage agreement in principle, including how it can help narrow your property search, strengthen your position as a buyer, and help you take the first step towards securing your dream home. Let’s begin.
Mortgage Agreement in Principle Explained
A mortgage agreement in principle gives you an early indication of how much a lender may be prepared to lend you. The estimate is based on information about your income, deposit, employment, credit commitments and wider financial circumstances.
If you’ve spoken to an estate agent, mortgage broker, or even a friend who is explaining their own mortgage journey, then you may also have heard terms such as a Agreement in Principle, Mortgage in Principle, Decision in Principle or a shortened AIP.
Although different lenders and brokers may use slightly different wording, these terms usually refer to the same type of early mortgage decision.
A mortgage agreement in principle is not the same as being fully approved for a mortgage. Instead, it should be treated as a useful guide when planning your next move.
Ultimately, a mortgage agreement in principle helps turn a “rough estimate” into something much more practical. Instead of spending time guessing which properties could potentially be affordable, an agreement in principle provides you with a borrowing amount that can help focus your search on properties realistically within your budget.
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Why Get a Mortgage Agreement in Principle?
A mortgage agreement in principle provides a realistic idea of your borrowing potential before you start viewing properties. Many estate agents will want to see that you have a mortgage in principle before accepting an offer on a property.
One of the biggest challenges when buying a home is knowing where to set your expectations. Without a clear understanding of what you may be able to borrow, it’s easy to spend time looking at a large number of properties that may unfortunately sit outside your budget.
With a mortgage agreement in principle (AIP), you can use your estimated borrowing amount and deposit to focus your property search on what may be affordable. This removes much of the guesswork and can help reduce the risk of falling in love with a home that may end up sitting just outside your budget.
In addition to helping narrow the property search, an AIP can also be useful when you’re ready to make an offer. While an AIP does not guarantee that your mortgage will be approved, it does show that you’ve taken steps to start the mortgage process and understand your borrowing position.
As such, having an AIP can help demonstrate that you are a serious buyer to estate agents and sellers and may strengthen your position when competing for a property.
Every buyer’s circumstances will be different, and securing an AIP does not lock you into a specific mortgage term or deal. Instead, many choose to apply for a mortgage in principle when they are:
- Starting their property search and want a clearer budget
- Preparing to make an offer on a home
- Checking whether their income is likely to support the mortgage they need
- Comparing their borrowing potential before speaking with estate agents
- Trying to decide whether now is the right time to buy
An AIP can also act as an early confidence check. If the estimated borrowing figure is lower than expected, you have an opportunity to review your plans, adjust your budget or seek further advice before spending time searching for properties that may not be affordable.
Ultimately, an agreement in principle can replace some of the guesswork with a more realistic borrowing estimate. This can help you approach your property search with a clearer budget and a better understanding of the homes that may be within your reach.
Find out how much you could borrow and get your agreement in principle today.
How Does an Agreement in Principle Affect Your Credit Score?
Applying for an agreement in principle will not usually affect your credit score. Most lenders will use a soft credit search to review your credit history, and these checks do not affect your credit score.
A soft credit search allows the lender to review information on your credit file without leaving a visible footprint that other lenders can see. Rather, it is similar to a snapshot of your credit profile and does not affect your credit score.
With that said, there are some lenders who may choose to carry out a hard credit search instead. Unlike a soft search, a hard credit search is recorded on your credit file and can be seen by other lenders. These types of checks involve a more detailed review of your credit profile.
While a single hard search is unlikely to cause significant issues, it’s important to note that multiple hard searches within a short period of time could have a temporary impact on your credit profile and can lead to some lenders viewing you as actively trying to seek credit.
To make the difference between soft and hard credit searches easier to understand, we’ve created a simple comparison table below:
| Credit Search Type | Soft Credit Search | Hard Credit Search |
| Visible to other lenders | No | Yes |
| Visible to you | Yes | Yes |
| Impact on your credit score | No impact | May have a temporary impact if multiple hard searches are carried out within a short period |
| How often used for AIPs | Most commonly used by lenders | Used by some lenders, depending on their assessment process |
It’s important to remember that each lender has its own criteria. As such, the exact credit assessment process for an agreement in principle will depend on your chosen lender.
Is an Agreement in Principle a Mortgage Offer?
No. An agreement in principle is not a formal mortgage offer or a guarantee that your mortgage application will be approved. A formal mortgage offer is only issued after you submit a full application and the lender completes its required checks.
An agreement in principle is only an early indication of how much a lender may be willing to lend based on the information available at the time of the application. It is designed to help you understand your potential borrowing power before submitting a full mortgage application.
The main difference between a mortgage agreement in principle and a mortgage offer is that a mortgage offer is only issued after the lender has completed a full assessment of both you and the property you intend to buy.
As such, an agreement in principle should be viewed as a useful guide rather than a guarantee. It can help focus your property search, but the final lending decision will only be made after your full mortgage application has been assessed.
How Can a Mortgage Broker Help You Get a Mortgage in Principle?
A mortgage broker can help you apply for an agreement in principle with a suitable lender. They will review your financial circumstances, assess how much you may be able to borrow and identify lenders whose criteria suit your situation.
Knowing which lender to approach and how to apply for a mortgage in principle is not always a straightforward process. Affordability calculations, credit searches and lending criteria can all vary, meaning the amount you may be able to borrow can differ between lenders.
A mortgage broker can help guide you through these differences before you apply. By reviewing your circumstances and comparing different lenders, a trusted broker can help identify suitable options and give you a clearer understanding of your borrowing potential before moving forward.
At Boon Brokers, our fee-free mortgage advisers help buyers understand exactly what is possible, before an application is submitted. By reviewing your circumstances upfront, we can help identify lenders whose affordability models and lending criteria are most closely aligned with your situation.
Whether you’re looking to understand your budget before viewing properties or want clarity that you’re approaching the right lender, our dedicated advisers can help guide you through the mortgage process.
Contact Boon Brokers today and speak with one of our dedicated mortgage experts about your mortgage options.
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Frequently Asked Questions
Does a Mortgage in Principle Include Your Deposit?
Yes. Lenders will usually ask how much deposit you have available when applying for a mortgage in principle. Your deposit helps determine how much you need to borrow and your loan-to-value (LTV) ratio. Generally, a larger deposit can also give you access to a wider range of mortgage options.
Can I Get Multiple Mortgage Agreements in Principle?
Yes. You can get more than one mortgage agreement in principle, but it is worth checking what type of credit search each lender uses before applying. Many lenders use a soft credit search, while some may carry out a hard search that is recorded on your credit file.
Can You View a House Without a Mortgage in Principle?
Yes. You can usually view a property without having a mortgage in principle. However, an estate agent may ask whether you have one, particularly when you are ready to make an offer. Having an AIP can help show that you have already explored how much you may be able to borrow.
Jack Freestone
I’m an established content writer at Boon Brokers, where I write and publish financial and mortgage-focused content across the UK property and lending marketplace. My work covers topics including first-time buyers, remortgaging, equity release, and wider market developments affecting borrowers. I hold a Master’s degree in English Literature from the University of Bedfordshire, graduating with distinction. Since then, I’ve worked across freelance, agency, and in-house roles, building experience writing across a range of subjects, with a focus on topics that directly affect everyday consumers. Today, my writing focuses on making complex financial topics clearer, more practical, and easier for everyday readers to understand.
