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An Agreement in Principle (AIP), also known as a Decision in Principle (DIP) or Mortgage Promise, is a statement from a lender indicating how much they may be willing to lend to a potential borrower

It’s the first step in the mortgage application process and is based on details provided about the applicant’s income, spending, and debts

An AIP is not a guarantee of a mortgage, but it gives an idea of how much one might be able to borrow

It can be useful when house hunting, as it provides a clearer understanding of what properties are within the potential borrower’s price range

It can also show estate agents and sellers that the potential buyer is serious, which could be advantageous if a seller is deciding between multiple buyers

To apply for an AIP, we will need to provide details of your income, outgoings, and any existing credit agreements

The lender may perform a soft credit check, which does not affect your credit score

However, when you apply for the actual mortgage, a full credit check will be carried out

It’s important to note that the details of the mortgage deal may change when you make a formal application, or the lender may decide not to grant the loan, for example, if your financial circumstances have changed

Also, if there’s a long period between getting the AIP and applying for the mortgage, interest rates may have changed, or we may find a better deal with a different lender

An AIP is different from a mortgage calculator, which provides a general idea of how much you might be able to borrow but is not as personalised

An AIP is a formal document that can be used when considering making an offer for a property

Finally, having financial difficulties in the past does not necessarily mean you can’t get an AIP. Check our info about getting a mortgage with bad credit

getting a mortgage with bad credit.

Risk Warning: The Financial Conduct Authority does not regulate some forms of Buy to Lets. Your home/property may be repossessed if you do not keep up repayments on your mortgage.