Buying your first home is an exciting step, but it can also feel overwhelming. One term you’re likely to hear early in the process is Agreement in Principle (AIP). But what exactly is it, and why is it important?
In this guide, we explain what an Agreement in Principle is, how it helps first-time buyers, and how it connects to mortgages, affordability, credit scores, and the role of a mortgage broker.
What is an Agreement in Principle?
An Agreement in Principle (AIP) — sometimes called a Decision in Principle or Mortgage in Principle — is a statement from a lender showing how much they might be willing to lend you based on a quick assessment of your financial situation.
It’s not a binding mortgage offer
It’s based on your income, credit history, and basic financial details
It usually involves a soft credit check, so it may not affect your credit score
An AIP is typically valid for 30–90 days and can be renewed if needed.
Why First-Time Buyers Need an Agreement in Principle
1. Understand Your Affordability
An AIP gives you a clear idea of what you can afford, helping you search for properties within your price range and avoid disappointment.
2. Show Sellers You’re Serious
Estate agents and sellers often ask for an AIP before accepting an offer. It proves you’re a credible buyer who can secure a mortgage.
3. Save Time and Reduce Stress
With an AIP in hand, you can focus your property search and move quickly when you find the right home.
The Link Between AIPs and Mortgages
An Agreement in Principle is not a mortgage offer — but it’s the first step toward one. It sets the groundwork for your formal mortgage application and helps you understand which lenders are likely to approve you.
An AIP can help speed up the mortgage process
It allows brokers to explore suitable deals based on real numbers
Affordability: How Much Can You Borrow?
The amount you can borrowing on a mortgage is based on a number of factors, primarily:
Your income
Your Regular outgoings
Outstanding debts or loans
Your deposit amount
Your Credit and Payment History
Knowing your borrowing power early helps you stay realistic about your budget to give you the confidence to start looking for your dream home
How Credit Scores Affect Your AIP
Lenders will usually run a soft credit check when issuing an AIP. This won’t impact your credit score, but it helps them assess your financial history.
A good credit score improves your chances of getting a higher mortgage amount approved in principle
Different lenders have different criteria — this is where a broker can help
Conclusion: Why an AIP Matters
For first-time buyers, getting an Agreement in Principle is more than just a formality. It’s a key tool that:
Clarifies what you can afford
Strengthens your position when making an offer
Gets you one step close to owning your first home
If you’re just starting your home buying journey, speak to one of our advisers today. We can help you secure your AIP and guide you through every step toward owning your first home.
Frequently Asked Questions about AIPs:
An Agreement in Principle (AIP) is a provisional mortgage agreement from a lender showing how much they may lend based on a soft credit check and basic financial details.
An AIP typically lasts 30–90 days—some lenders may allow renewal if needed.
Not always, lenders usually perform a soft credit check that does not affect your credit rating. You should check with your mortgage broker or lender to confirm.
While not always mandatory, many sellers and estate agents may require it—it shows you’re a serious, mortgage-ready buyer. This is important, especially for popular properties
Absolutely—brokers can match you with the right lender and arrange your AIP swiftly, even if you have complex financial circumstances.
