The Agreement in Principle, explained
An Agreement in Principle (AIP) is a lender’s initial indication of how much it may lend you, based on a soft check of your circumstances. It lets you view and make offers with confidence — and for contractors, getting it from a lender that already understands day-rate income avoids wasted searches.
What an AIP is
Also called a Decision in Principle, an AIP is a lender’s early statement that it would, in principle, lend you a certain amount, subject to full checks. It isn’t a formal mortgage offer, but it shows estate agents and sellers you’re a serious, credible buyer.
Why contractors should get one first
For contractors, the AIP is also a test of placement. Obtained from a lender that assesses contract income correctly, it gives a realistic figure to view against. Obtained carelessly from a lender that misreads your income, it can produce a low number — or a needless hard credit footprint.
- Confirms a realistic budget before you view.
- Strengthens your position when you make an offer.
- Helps avoid falling in love with a home outside range.
Credit and validity
Most AIPs use a soft credit check that doesn’t affect your score; the full application later involves a hard check. An AIP typically lasts around 30 to 90 days and can usually be renewed.
- An AIP is an indication, not a formal offer.
- Get it from a contractor-friendly lender for a realistic figure.
- Usually a soft check — no impact on your score.
- Typically valid ~30–90 days, and renewable.
Why it matters which lender gives you the AIP
An Agreement in Principle from a lender that reads your income badly is not just useless — it is actively misleading. It gives you a figure, you plan around it, and you narrow your search to properties that a suitable lender would never have restricted you to.
For a contractor, getting the first AIP from a lender applying contract-based underwriting is therefore worth more than getting one quickly. The number you see first tends to anchor every decision that follows, so it should be the real one.
What it does and does not commit anyone to
An AIP is an indication based on information not yet verified. It is not an offer, it does not oblige the lender to lend, and the figure can change once documents are checked and a valuation is done. Estate agents treat it as evidence you are a serious buyer, which is its main practical use.
Most run for a limited period — commonly around 90 days — after which it lapses and can be refreshed. If your circumstances change materially in the meantime, particularly your contract or your commitments, tell your adviser rather than relying on the existing certificate.
Process, answered
Does an Agreement in Principle affect my credit score?+
Most use a soft search that isn’t visible to other lenders and doesn’t affect your score. The hard check comes at full application — which is why you don’t want multiple careless AIPs.
How long does an AIP last?+
Typically around 30 to 90 days depending on the lender, and it can usually be renewed if your search takes longer.
Is an AIP a guarantee of a mortgage?+
No. It’s an indication based on initial information. The formal offer follows full underwriting, including verification of your contract income and a property valuation.
Does an Agreement in Principle affect my credit score?+
It depends on the lender and the type of search used. Some run a soft search which leaves no visible footprint; others use a hard search that other lenders can see. It is worth asking which applies before proceeding, particularly if you may approach several lenders, since a series of hard searches in a short period can itself become an issue.