Mortgage Agreement in Principle (AIP) (also known as DIP)

Mortgage Agreement in Principle (AIP): what it is and how it works

A Mortgage Agreement in Principle (AIP)—sometimes called a Decision in Principle (DIP)—is an early indication from a lender of how much they may be willing to lend you for a property purchase.

It’s designed to help you understand your likely borrowing capacity before you find the home you want, and to give estate agents and sellers more confidence that your mortgage plan is realistic.

An AIP is not the same as a final mortgage offer. It’s an initial assessment based on the information you provide at the time.

AIP vs full mortgage offer

A full mortgage offer is the formal stage that follows detailed checks (including the property and supporting documentation).

An AIP typically sits earlier in the process and focuses on:

• Your affordability based on the details you submit
• The type of mortgage you’re seeking (for example, repayment or interest-only)
• Whether the lender’s criteria appear to be met at that point in time

Because it’s based on initial information, an AIP can change as your application progresses—especially if your circumstances or the property details differ.

Why an AIP can be useful when buying a home

For first-time buyers and home movers, an AIP can help in practical ways:

• Budgeting with clarity: you can estimate the likely mortgage size and plan around it.
• Making stronger offers: sellers may prefer buyers who already have an indication of mortgage funding.
• Reducing delays after an offer is accepted: if your circumstances haven’t changed, moving from AIP to full application can be smoother.

In competitive areas, having an AIP can make your offer feel more “ready to proceed”, particularly when there are other buyers in the chain.

How to get an AIP

Getting an AIP is usually a straightforward process, but it relies on accurate information.

1) Prepare the key details

Lenders commonly expect information similar to what you would provide in a full mortgage application, such as:

• Income details (employment or self-employment)
• Current outgoings (for example, existing loans or credit commitments)
• Deposit information and how you plan to fund it
• Property details (sometimes later in the process, depending on the lender)
• Basic personal details and residency information

2) Submit an application for an initial assessment

Once submitted, the lender (or their decision process) reviews the information and determines whether you appear to meet their lending criteria.

3) Receive the AIP decision

If approved, you’ll typically receive an indication of the maximum borrowing the lender is prepared to consider at that time.

What information do lenders use for an AIP?

An AIP is often described as “in principle” because it’s based on the information provided at the start.

In practice, that means your AIP will usually reflect:

• Your stated income and employment status
• Your debts and monthly commitments
• Your deposit amount
• The mortgage type and term you’re applying for
• Credit-related information (the lender may carry out checks as part of the decision)

Because the AIP is only as good as the inputs, it’s important that details are up to date and consistent with what you can evidence later.

How long does an AIP last?

AIP validity periods vary by lender and by the way the decision is issued, so there isn’t one single timeframe that applies to everyone.

A practical approach is to apply when you’re ready to start making offers, rather than too far in advance—so you’re less likely to need to repeat the process if it expires.

Common reasons an AIP may not lead to a final offer

Even if you receive an AIP, the final mortgage offer can still differ once the full application is assessed.

Potential reasons include:

• Changes in your circumstances (for example, a new job, reduced income, or increased spending)
• Credit information changes between the AIP stage and full application
• Property-related factors discovered later (such as valuation outcomes)
• Differences between what was declared and what is evidenced

For that reason, it’s sensible to treat an AIP as a helpful starting point—not a guarantee of the final mortgage terms.

Timing tips for first-time buyers and home movers

An AIP can be most effective when it supports your purchase timeline.

Consider applying:

• When you’re actively searching and likely to make an offer soon
• After you’ve reviewed your finances and deposit position
• Before you commit to a purchase so you can plan around likely borrowing

If you’re not yet sure when you’ll be ready to offer, it can help to align the AIP timing with the point at which you expect to start viewing properties seriously.

AIP and your credit file: what to expect

Because an AIP involves an assessment, it may involve checks that can affect your credit file.

To keep things as smooth as possible:

• Ensure the information you provide is accurate
• Avoid making major financial changes during the application window
• Be mindful of applying repeatedly if you’re not ready to move forward

Frequently used terms: AIP, DIP, and “in principle”

You may see different labels for the same concept:

• AIP: Agreement in Principle
• DIP: Decision in Principle

They generally refer to an early lending indication based on initial information, rather than a final mortgage offer.

Summary

A Mortgage Agreement in Principle (AIP) is an early indication of how much a lender may be willing to lend you, based on the information you provide at the time.

For first-time buyers and home movers, it can support budgeting, strengthen offers, and help reduce delays once an offer is accepted—provided your circumstances and the application details remain consistent as you move towards a full mortgage offer.