What is a Mortgage Agreement in Principle

A Mortgage Agreement in Principle (AIP), also known as a Decision in Principle (DIP) or a Mortgage Promise, is a document or statement provided by a lender that indicates their willingness to lend you a certain amount of money for a mortgage based on an initial assessment of your financial circumstances.

When you apply for a mortgage, the lender typically evaluates your creditworthiness and affordability by assessing factors such as your income, expenses, credit history, and the size of the deposit you have available. The AIP is a preliminary evaluation that gives you an indication of how much you may be able to borrow from the lender.

To obtain an AIP, you generally provide the lender with some basic information about your financial situation, such as your income, employment details, and any outstanding debts or financial commitments. The lender then conducts a credit check and assesses this information to determine whether you meet their lending criteria and how much they may be willing to lend you.

It's important to note that an AIP is not a guarantee that you will secure a mortgage or be offered the exact terms outlined in the agreement. It is a provisional decision based on limited information. Once you find a specific property and proceed with a full mortgage application, the lender will conduct a more thorough assessment, including a property valuation, before making a final decision.

Obtaining an AIP can be useful when house hunting as it gives you an idea of the price range within which you can search for properties. It can also demonstrate to sellers and estate agents that you are a serious buyer, potentially strengthening your position when making an offer on a property.