First-Time Buyer Mortgage Agreement in Principle: What You Need Before Viewing Homes

An Agreement in Principle can help a first-time buyer move from browsing properties to viewing with a realistic budget. It gives an initial indication of how much a lender may be prepared to lend, based on the information and checks completed at that stage.

It is not a mortgage offer, and it does not guarantee that a full application will be approved. Used properly, though, it can show estate agents and sellers that you have started preparing your finances and can help you avoid looking at homes outside a sensible price range.

This guide explains what an Agreement in Principle means, what information you may need, when to obtain one and what can change between the initial decision and a full mortgage offer.

For personal advice on your borrowing position, visit our first-time buyer mortgage page or book a free mortgage consultation.

1. What Is a Mortgage Agreement in Principle?

An Agreement in Principle is an initial indication from a lender of how much it might be willing to lend. It may also be called a Mortgage in Principle, Decision in Principle, DIP or MIP.

The lender or mortgage adviser will usually ask for details such as your income, regular expenditure, credit commitments, deposit and residential history. The lender then applies an initial version of its lending criteria and affordability assessment.

The result may state a maximum loan figure, confirm that you appear eligible within a particular range, or explain that more information is needed. The format varies by lender.

MoneyHelper states that a mortgage in principle commonly lasts between 30 and 90 days. The exact period and renewal process depend on the lender, so check the expiry date before relying on it for viewings or an offer.

2. Why First-Time Buyers Often Get an AIP Before Serious Viewings

An AIP is useful because it turns a rough online estimate into a more structured assessment. It can help you:

• Set a more realistic property search range
• Understand whether your income and commitments support your target loan
• Identify credit, deposit or documentation issues before making an offer
• Show an estate agent that you have taken steps towards mortgage readiness
• Act more quickly if you find a suitable property

Some estate agents may ask whether you have an AIP before arranging certain viewings or putting your offer to a seller. They may also ask for evidence of your deposit and buying position. An AIP does not prove that funds are guaranteed, but it can form part of the evidence that you are a serious buyer.

For buyers in London and the South East, where suitable properties can attract several interested parties, having your mortgage position reviewed early can prevent avoidable delays.

3. Why an Agreement in Principle Is Not a Mortgage Offer

An AIP is based on limited information and initial checks. A full mortgage offer is only considered after the lender receives a complete application, verifies the evidence and assesses the property.

A full application may include:

• Detailed income and employment checks
• Review of bank statements and credit commitments
• Proof and verification of the deposit source
• A full credit search
• A valuation of the property
• Checks against the lender’s property and lending criteria
• Further underwriting questions where needed

This means an AIP can be accepted and a later application can still be reduced, referred or declined. Common reasons include information not matching the documents, a change in circumstances, a property that is not acceptable to the lender or an affordability result that changes after the full review.

4. Your AIP Figure Is Not the Same as Your Complete Buying Budget

A lender’s initial loan figure is only one part of the calculation. Your maximum purchase price also depends on your usable deposit and the money you need to keep aside for buying costs.

First-time buyers may need to budget for:

• Solicitor and conveyancing fees
• Survey costs
• Mortgage product, valuation or broker fees where applicable
• Stamp Duty Land Tax where payable
• Removal, furnishing and initial repair costs
• A financial buffer after completion

In England and Northern Ireland, qualifying first-time buyer relief currently applies to purchases of £500,000 or less, with no Stamp Duty Land Tax on the first £300,000 and 5% on the portion from £300,001 to £500,000. If the purchase price is above £500,000, the relief does not apply. Tax rules can change and individual eligibility matters, so check the current position before committing.

Use the mortgage calculator for an initial repayment illustration and check the current GOV.UK Stamp Duty Land Tax rates before committing to a purchase. A mortgage adviser can then assess the figures against lender criteria and your wider circumstances.

5. What Information and Documents May Be Needed for an AIP?

The initial information requested depends on the lender and whether you apply directly or through a mortgage adviser. You should expect to provide accurate figures rather than estimates where possible.

Information commonly requested includes:

• Your full name, date of birth and address history
• Employment status and length of service
• Basic salary and any regular bonus, overtime or commission
• Self-employed income, accounts or tax figures where relevant
• Loans, credit cards, car finance, student loan deductions and other commitments
• Childcare, maintenance or other regular expenditure
• Deposit amount and where it is coming from
• The expected property price and mortgage term

Although every lender will not request all supporting documents at the AIP stage, preparing them early helps make sure the figures used can be evidenced later.

You may need:

• Recent payslips and a latest P60
• Personal bank statements
• Proof of deposit or savings statements
• Identification and proof of address
• Accounts, tax calculations and Tax Year Overviews if self-employed
• Evidence of bonus, overtime, commission or other income
• Details of any gifted deposit

6. Does an Agreement in Principle Affect Your Credit Record?

Many lenders use a soft credit search when assessing an AIP. A soft search can be recorded on your credit file without being visible to other lenders in the same way as a hard application search.

Not every lender follows the same process. Some may use a hard search, and the search type can depend on the product or application route. You should be told what type of check will be completed before you proceed.

A formal mortgage application will usually involve a hard credit search. Several hard searches over a short period can make your credit record look as though you are seeking repeated borrowing, so avoid submitting multiple applications without understanding the likely outcome.

Before requesting an AIP, check that your address history, electoral register details and credit accounts are accurate. Raise any recent missed payments, defaults, arrangements or other issues with your adviser at the start rather than waiting for the lender to find them.

7. Gifted Deposits and Source of Funds

A gifted deposit can be acceptable to many lenders, but it must be declared and documented correctly. The lender and solicitor may need to know who is providing the gift, their relationship to you and whether the money is repayable.

A genuine gift is normally expected to be non-repayable and not to give the donor an ownership interest in the property, although criteria vary. The donor may be asked to sign a gifted deposit declaration and provide identification, bank statements or evidence showing how the funds were accumulated.

Do not describe borrowed money as savings or a gift. Personal loans, credit cards and informal family loans can affect affordability and may not be acceptable as a deposit source. Explain the full arrangement before requesting an AIP so the adviser can check lender criteria.

8. What Can Change or Invalidate an AIP?

An AIP is based on the circumstances declared at the time. Tell your adviser if anything changes before you offer on a property or make the full application.

Changes that may affect the result include:

• Starting a new job, entering probation or changing employment status
• A reduction in salary, bonus, overtime or self-employed income
• Taking new credit, increasing card balances or arranging car finance
• Missing a payment or entering an overdraft unexpectedly
• Changing the deposit amount or source
• Buying with a different person
• Looking at a property type the lender will not accept
• Allowing the AIP to expire
• Discovering commitments or dependants not included initially

Even where your circumstances stay the same, lender products and criteria can change. An old AIP should not be treated as permanent confirmation of borrowing.

9. When Should a First-Time Buyer Get an AIP?

The most useful time is usually when you are financially ready to buy and expect to begin serious viewings. Applying too early can mean the AIP expires before you find a property. Applying only after you make an offer can leave you trying to resolve documents or credit issues under pressure.

Before requesting the AIP, try to have:

• A realistic deposit figure
• A clear view of your monthly commitments
• Recent income evidence
• An accurate address history
• A target purchase range and preferred area
• Details of any gifted deposit or non-standard income

If your AIP expires, a lender may require updated information and another credit check. Do not assume a renewal will produce the same figure, especially if your income, commitments or the lender’s criteria have changed.

10. What Happens After Your Offer Is Accepted?

Once a seller accepts your offer, your adviser can review whether the lender and product used for the AIP remain suitable. The full mortgage application will then include the property details and supporting evidence.

The usual stages include:

1. Confirm the purchase price, deposit and property details
2. Review the latest mortgage products and lender criteria
3. Submit the full application and documents
4. Respond to underwriting questions
5. Complete the lender’s valuation
6. Receive the formal mortgage offer if approved
7. Continue the legal work through exchange and completion

Your solicitor’s legal checks and the lender’s mortgage assessment are separate processes. A mortgage offer does not replace a survey, and an AIP does not confirm that a specific property is suitable security.

Why Use a Mortgage Broker for an Agreement in Principle?

An online AIP can be quick, but the highest displayed figure is not always the most reliable route to a successful application. Different lenders treat income, credit commitments, gifted deposits, probation periods, flats, new-build properties and self-employed applicants differently.

A mortgage adviser can help by:

• Checking whether your target budget is realistic
• Reviewing the evidence behind the figures before submission
• Identifying lenders whose criteria fit your circumstances
• Explaining whether the credit check is soft or hard
• Helping you avoid unnecessary applications
• Updating the recommendation when you find a property
• Managing the full application through to mortgage offer

Apply Mortgages supports first-time buyers across London, Essex and the South East. We can review straightforward applications as well as cases involving gifted deposits, self-employed income, variable pay, credit issues or less typical properties.

First-Time Buyer Agreement in Principle Checklist

Before you view seriously: ask whether the figures used for your AIP can be supported by the documents you will need for the full mortgage application.

Preparing to Buy Your First Home?

An Agreement in Principle can help you search with a clearer budget and show that you have started preparing for a mortgage. Its value depends on the accuracy of the information supplied and whether the lender’s criteria still fit when you make the full application.

Before relying on an AIP, make sure your income, commitments and deposit can be evidenced. Keep enough money aside for purchase costs, avoid new borrowing and raise any unusual circumstances early.

Apply Mortgages can review your position, identify suitable lender criteria and help you move from an initial affordability check to a full mortgage application.

Visit our first-time buyer mortgage advice page for more information.

Important information: This article is for general information only and does not constitute personalised financial, mortgage, legal or tax advice.

Your property may be at risk and repossessed if you are not able to keep up with the repayments on your mortgage or any other debt secured on it.

There may be a fee for mortgage processing. The precise amount will depend on your circumstances and will be confirmed before you choose to proceed.

Mortgage availability and lending are subject to status, affordability, lender criteria, property acceptability and individual circumstances.

Tax rules, allowances and reliefs can change. Check the current position and obtain appropriate professional advice where needed.