Agreement in Principle

When applying for a mortgage an ‘agreement in principle’ (AIP) is an important step in the process. It is also commonly referred to as a ‘mortgage in principle’ or ‘decision in principle.’

An AIP is essentially a conditional statement from a mortgage lender that indicates the amount they are likely to lend you based on an initial assessment of your financial situation. It serves as an indication that the lender is willing to lend you the specified amount, subject to further checks and a full mortgage application.

Getting an AIP is usually one of the first steps when looking to buy a property. It helps you understand how much you might be able to borrow, giving you an idea of your budget and enabling you to search for properties within your price range. It also demonstrates to estate agents and sellers that you are a serious buyer.

To obtain an AIP, you can approach various sources. Typically, you can contact mortgage lenders directly, either online or through their branches, and provide them with basic information about your income, expenses, and credit history. You may also use the services of a mortgage broker who can help you compare offers from different lenders and guide you through the application process.

It’s important to note that an AIP is not a guarantee of a mortgage approval, as the lender will conduct a more thorough assessment during the formal mortgage application process. However, having an AIP can give you confidence when making an offer on a property, as it demonstrates your financial readiness to proceed with the purchase.

Remember, it’s always advisable to seek professional advice from a qualified mortgage advisor or financial expert to ensure you understand the specifics of your situation and make informed decisions.