How do I get an AIP?
Posted on 15th November 2022 at 12:00
An Agreement in Principle (AIP), sometimes known as a Decision in Principle (DIP), provides an initial acceptance of a lenders criteria. Some estate agents may insist you have an AIP before showing you available properties or make an offer as this shows them you are a serious buyer and have the funding available to move forwards. It is a good idea to take advice from a mortgage broker to discuss your personal circumstances before getting an AIP as a soft credit check will be carried out as part of the process. It is peace of mind in knowing you have options for a mortgage.
What information do I need to get an AIP?
You will need to go through a fact find process with an adviser, taking into account your personal information and income/expenditure details. You may also need to discuss any history of adverse credit. You will have discussed the details of the property/mortgage you are looking to obtain with your adviser. The application will then be made for the AIP based on value/purchase price and deposit level.
Can my mortgage broker get me an AIP?
How long does an AIP take?
Not long, following the information gathering, the adviser will produce the application to the chosen lender. The results are usually instant. In some circumstances, the lender will need longer to decide on the outcome – usually 24-48 hrs.
Will credit checks be carried out?
Yes, the lender will run some form of search on your credit file when you apply for an AIP. This is to establish whether they are happy to consider lending you the amount you require. The mortgage lender will assess your credit history and any past and present debts, such as credit cards and loans. Most lenders will leave a ‘soft’ footprint on your credit profile, however it’s worth checking the details with your mortgage broker or lender before you apply. A hard footprint will be visible to other lenders on your credit file. If there are a high number of hard searches on your credit file within a short period of time, it can have a negative impact on your credit score.
Remember – nothing is set in stone!
An AIP is an indication of what you could borrow and that you should be able to obtain a mortgage. Obtaining an AIP is not the same as obtaining a mortgage offer. There is still the possibility that your full mortgage application could be rejected. Common reasons for being declined after a successful AIP include factors like property valuation issues, changing jobs, taking out another form of credit, undisclosed credit issues coming to light or not meeting specific lending criteria/documentary evidence issues.
What if my AIP is declined?
Don’t give up hope! Different lenders have different criteria. For example, if you have inadequate or unreliable income, you have recently changed jobs or are self-employed, you have a poor credit score or have too much debt. Working with an experienced broker will ensure you have the best possible chance of the process running smoothly.
When should I get an AIP?
If you are a first-time buyer, estate agents usually prefer to have an AIP in place to show that you are committed to purchasing a property. The earlier you discuss this with your adviser, the better. You will then have the knowledge of the lenders and the borrowing capacity. You will also have a clear understanding of the costs, interest rates and fees. At the point you are remortgaging, an AIP will usually be applied for at the point you’ve chosen a specific mortgage product with a lender.
How long does an AIP last?
This depends on the lender. Usually between 30 and 90 days. Applications/lenders go through another search at the point of full application. If there is a significant change in circumstances such as loss of income or additional debt, your original AIP may no longer be valid.
How do I find out more?
Call us on 01302 866787 and speak to one of our trusted advisers.
FCA Disclaimer
According to our research, the content contained in this article is accurate at the time of writing.
Infomation on this website is NOT bespoke advice to its audience and therefore does NOT constitute financial advice.
Readers are encouraged to contact our qualified advisers directly for mortgage and protection advice.
As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments.
Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home.
Share this post: