What Is an Agreement in Principle?

Agreement in Principle Explained: What It Means and How It Affects Your Mortgage.

If you’re buying your first home, chances are you’ve heard the phrase Agreement in Principle — sometimes called a Decision in Principle (DIP) — and wondered:

“So… does that mean my mortgage is sorted?”

It’s a very common assumption — and one of the biggest areas of confusion for first-time buyers.

An Agreement in Principle (often shortened to AIP or DIP) is an important step in the mortgage process, but it is not the final approval many people think it is.

This guide explains what an Agreement in Principle actually means, what it doesn’t mean, and how it fits into the wider first-time buyer mortgage journey.

⚠️ This article is for general information only and does not constitute mortgage advice. Lender criteria can change and individual circumstances will affect outcomes.

What is an Agreement in Principle?

An Agreement in Principle is an indication from a mortgage lender that:

• Based on the information provided so far
• And usually a credit check
• They would consider lending up to a certain amount

It is an early-stage affordability check, not a guarantee of lending.

Most buyers use an Agreement in Principle to:

• Understand their potential borrowing power
• Show estate agents they are financially serious
• Support an offer on a property

An Agreement in Principle is sometimes also referred to as a mortgage in principle or decision in principle — all terms mean the same thing.

Is an Agreement in Principle the same as a mortgage offer?

No — and this is where many first-time buyers get caught out.

An Agreement in Principle:

• ❌ Is not a mortgage offer
• ❌ Is not legally binding
• ❌ Can be withdrawn or amended

A formal mortgage offer is only issued after:

• A full mortgage application
• Detailed affordability checks
• Verification of documents
• A property valuation
• Full underwriting by the lender

An AIP is the starting point, not the finish line.

What information is used for an Agreement in Principle?

To issue an AIP, lenders usually assess:

• Income details
• Basic monthly outgoings
• Existing credit commitments
• Credit history (via a soft or hard search, depending on the lender)

When an AIP is completed directly online, the information is often self-declared and not yet verified.

This is why borrowing figures can change later.

Each lender also uses a different affordability model, which means the amount you can borrow can vary significantly between lenders.

AIP through a mortgage broker

When an Agreement in Principle is completed through a mortgage broker, documents are often reviewed upfront.

This means:

• Figures are more accurate
• Lender criteria is matched correctly
• Borrowing potential can sometimes differ depending on lender choice

This helps reduce the risk of surprises after your offer has been accepted.

Does an Agreement in Principle affect your credit score?

It depends on the lender.

Some AIPs use:

• Soft credit searches – these do not affect your credit score

Others may use:

• Hard credit searches – these can have a small temporary impact

A mortgage adviser should always confirm which type of credit search will be used before submitting an AIP.

How long does an Agreement in Principle last?

Most Agreements in Principle are valid for:

• 30 to 90 days

The exact length depends on the lender.

An AIP may need refreshing if:

• It expires
• Your circumstances change
• Income documents or bank statements become out of date

Why can an Agreement in Principle change later?

Even with an AIP in place, things can still change at full mortgage application stage.

Common reasons include:

• Differences between estimated and verified income
• Changes in spending or credit commitments
• New finance taken out
• Property valuation issues
• Lender-specific criteria applied later

This doesn’t mean you’ve done anything wrong — it’s simply how mortgage underwriting works.

Should you have an AIP before viewing properties?

Many estate agents prefer buyers to have an Agreement in Principle before accepting an offer.

While it’s not always required just to view properties, having one:

• Demonstrates affordability
• Strengthens your offer
• Can place you ahead of competing buyers
• Reduces the risk of disappointment later

Helpful tip

If your AIP shows a higher borrowing amount than you plan to offer, your broker can usually reduce the figure shown on the certificate.

This can help with negotiations, as estate agents act in the seller’s best interest.

The borrowing amount can always be increased later if needed — particularly when using a lender that performs soft-search Agreements in Principle.

Common Agreement in Principle myths

“An AIP means the mortgage is guaranteed.”
It doesn’t — the lender has not yet fully underwritten your documents.

“Once I have an AIP, I’m locked into that lender.”
You’re not. An AIP does not commit you to applying with that lender.

“If my AIP is declined, I can’t buy a house.”
Different lenders assess affordability differently — one decline does not mean all options are exhausted.

Final thoughts on Agreements in Principle

An Agreement in Principle is a valuable and important step in the first-time buyer journey — but it is only one step.

Understanding what it does and doesn’t mean can help manage expectations, reduce stress, and make the rest of the buying process feel far more straightforward.

This article is intended as general information only. Mortgage eligibility and suitability depend on individual circumstances, and lender criteria can change. A mortgage adviser can help explain how an Agreement in Principle applies to your individual situation.