What is a Mortgage Agreement in Principle? 

If you’re looking to get on the property ladder as a first-time buyer, or you’re a home mover looking for a bigger property, you may wish to obtain an Agreement in Principle. Having a clear understanding of what an Agreement in Principle is, and how it is obtained, can help you better understand the home buying process. 

What is an Agreement in Principle? 

An Agreement in Principle, also known as a Mortgage in Principle or Decision in Principle, is a written estimate from a mortgage lender outlining how much they may be willing to lend based on the information provided about your current financial circumstances. 

An Agreement in Principle is not a guarantee that a mortgage will be approved, as a full mortgage application and further assessment will usually be required. 

The Difference Between an Agreement in Principle and a Mortgage Offer 

An Agreement in Principle is not the same as a formal mortgage offer. It is an indication of how much a lender may be willing to lend, whereas a formal mortgage offer is issued only after a full assessment of your application and subject to the lender’s criteria. 

Having an Agreement in Principle can help you understand the price range of properties you may wish to consider. It may also demonstrate to estate agents and sellers that you have taken steps to explore your mortgage options. 

Once you have found a property and your offer has been accepted, you will usually need to submit a full mortgage application. At this stage, the lender will typically request additional information and carry out a more detailed assessment of your income, finances, affordability and the property before making a lending decision. 

How to Obtain an Agreement in Principle 

Many mortgage lenders offer the option to apply for an Agreement in Principle online. If you have the relevant information available, the process can often be completed relatively quickly, although timescales may vary depending on the lender and the information required. 

Before applying, it is worth taking time to research your options and understand the products available. You may choose to compare mortgage deals yourself using comparison tools, or speak to a qualified mortgage adviser. 

A mortgage adviser can explain the options available, help you understand lender criteria and guide you through the mortgage application process based on your individual circumstances. 

How Long Does an Agreement in Principle Last? 

In most cases, an Agreement in Principle will last between 30 and 90 days, depending on the mortgage lender. 

If you have not found a suitable property within this period, you may need to apply for a new Agreement in Principle. Whether a new Agreement in Principle is issued will depend on your circumstances and the lender’s criteria at the time. 

It is also important to understand that mortgage rates and lender criteria can change. Changes to interest rates, lending policies or your personal circumstances may affect the outcome of a future mortgage application. 

If the information you provided when applying for your Agreement in Principle changes during the validity period, you should check with your mortgage adviser or lender to confirm whether it remains valid. 

Do You Need a Mortgage Adviser? 

If your circumstances change after receiving an Agreement in Principle, it is important to inform your mortgage adviser or lender. Changes to factors such as your income, employment status, financial commitments or credit profile may affect the information originally provided. 

Your mortgage adviser or lender can confirm whether the Agreement in Principle remains valid or whether an updated application may be required. 

Important Information 

An Agreement in Principle does not guarantee that a mortgage will be offered, as a full application and further assessment will usually be required.