A buyer arrives at a viewing waving a PDF and says they are "approved." An agent glances at it, sees a lender's logo and a big number, and treats the offer as funded. Six weeks later the sale collapses at underwriting. Nothing dishonest happened — the document was real, and the buyer genuinely believed it. What went wrong is that almost nobody in the chain knew what a mortgage in principle actually is, what the lender checked before issuing it, and what it deliberately says nothing about. This guide unpacks the document itself: how it is produced, what the credit search does to a buyer's file, how long it survives, why applications still fail after one is issued, and how agents and advisors should read one before a property comes off the market.
A mortgage in principle — issued under the names agreement in principle (AIP) or decision in principle (DIP) depending on the lender — is a written statement of how much a lender would, in principle, be prepared to lend a specific borrower. It is produced from three inputs: the figures the borrower declares (income, employment type, existing credit commitments, deposit), a credit search, and the lender's own affordability model and criteria on the day it is run.
Notice what is missing from that list: a property. An AIP is issued before the borrower has chosen a home, which means it cannot possibly speak to whether the lender will fund this purchase at this price. It is a statement about the borrower, produced in a vacuum. Every AIP therefore carries a set of conditions, and those conditions are the whole story: subject to verification of the declared figures, subject to a full underwrite, and subject to a satisfactory valuation of the property.
That last condition is the one that surprises people. Two buyers can hold identical AIPs for the same amount, and one purchase completes while the other fails — because the lender liked one property and not the other. The AIP was never wrong. It was answering a different question.
Soft search vs hard search: what it does to a credit file
The credit check behind an AIP comes in two flavours, and the difference matters more than most buyers realise.
Soft search. Recorded on the borrower's file but visible only to them. Other lenders cannot see it, and it has no effect on how a future application is assessed. A borrower can collect several without consequence.
Hard search. Recorded and visible to other lenders, typically for a year or more. One is unremarkable. Several in a short window can read as a borrower being repeatedly declined, or as someone taking on credit in multiple places at once — and that inference can itself tighten a later decision.
The practical advice is narrow and worth giving to every client: find out which search type a lender runs before applying, and do not gather AIPs from four lenders "to compare." Compare products with an advisor on paper, then run the search once, with the lender you actually intend to use. A broker who knows each lender's search behaviour is genuinely valuable here in a way that is hard to replicate with a comparison site.
Why lenders put an expiry date on it
Most AIPs last between 30 and 90 days. That window is not bureaucratic caution — it reflects how quickly the inputs decay. Product rates reprice, sometimes weekly. The lender's affordability model and stress assumptions are revised as its own funding costs move, as covered in our guide to the mortgage stress test. And the borrower's own file changes: a new car finance agreement, a change of job, a missed payment.
Renewal is usually simple, but it is worth framing honestly to clients: a renewed AIP is a fresh assessment, not a rubber stamp. If rates have risen since the original, the new maximum can be lower — on exactly the same income. Buyers who have been searching for five or six months are the ones most likely to be caught by this, and they are also the ones least likely to expect it.
A worked example: reading the numbers on the page
Take an illustrative buyer holding an AIP for €340,000, with declared savings of €60,000. On the face of it, that supports a purchase up to €400,000. Now subtract what the savings actually have to cover in most markets: transfer tax or stamp duty, legal fees, a valuation fee, broker or agent fees, and moving costs — call it €18,000 illustratively.
Usable deposit: €60,000 − €18,000 = €42,000.
Maximum realistic purchase: €340,000 + €42,000 = €382,000.
At a €395,000 asking price, the buyer is roughly €13,000 short — despite an AIP that "covers" it.
There is a second trap in the same numbers. Suppose the buyer offers €395,000 anyway and the lender's valuation returns €380,000. Lenders size the loan against the lower of price and value, so the shortfall the buyer must fund in cash grows by the full €15,000 gap on top of the deposit already committed. (All figures are illustrative and rounded, to show the mechanics; real costs and lender rules vary by market.) This is why our guide to handling a low appraisal is worth reading before an offer, not after one.
Why applications still fail after an AIP
The gap between an AIP and a formal offer is where deals die. The recurring causes are boringly consistent:
Declared income does not survive verification. Bonus, commission or self-employed income is often stated at its best year and assessed at an average, or at the lower of the last two years.
Undeclared commitments surface. Bank statements reveal a loan, a buy-now-pay-later balance or an unused credit limit the affordability model was never told about.
The property is the problem. Non-standard construction, a short lease, a defect flagged by the surveyor, or an unusual use class can make a home unmortgageable regardless of how strong the borrower is.
The valuation lands under the price. The single most common late-stage failure, and the one an agent has the most influence over — because it is a pricing question, not a lending question.
That last point is where the AIP stops being a mortgage topic and becomes an agent's problem. If the price you agreed cannot be evidenced by comparable sales, the lender will eventually say so. Checking that before the property comes off the market is cheap; discovering it eight weeks in is not. This is the workflow Biedradar was built for: enter an address and it returns comparable sales, a valuation range and market signals, then produces a branded property analysis report you can put in front of a client in minutes — so the price you are defending is the price the evidence supports.
How agents should qualify a buyer holding an AIP
Demanding more than an AIP at offer stage will shrink your buyer pool without making your sales safer. The better discipline is to actually read the document instead of noting that one exists. Four checks take about ninety seconds:
Which lender, and issued when? A four-month-old AIP is expired or close to it.
How much — and does it plus the deposit cover the offer? Do the arithmetic from the worked example above rather than assuming.
Is there evidence of the deposit? The lending side and the cash side fail independently; see proof of funds for what good evidence looks like.
Is the buyer's own sale in the chain? An AIP says nothing about whether the buyer can complete on time.
Recording those four answers on every offer turns a vague sense of "this buyer seems fine" into something you can compare across three competing offers — which is exactly the judgement call covered in handling multiple offers.
Framing it for the client
The honest one-line explanation for a buyer is this: a mortgage in principle proves you are a plausible borrower, not that this purchase is funded. It gets you taken seriously at viewings and it stops you wasting months looking at the wrong price bracket. It does not remove a single underwriting check, and it makes no claim at all about the house you eventually choose. Buyers who understand that distinction behave better under pressure — they keep a cash buffer, they do not treat the AIP figure as a shopping budget, and they are far less likely to stretch to a price the valuation will not support. Advisors and agents who explain it the same way lose fewer deals in the last three weeks, which is the only part of the process where a collapse costs everybody real money.
Frequently asked questions
What is a mortgage in principle?
A mortgage in principle — also called an agreement in principle (AIP) or decision in principle (DIP) — is a written indication from a lender of how much it would be willing to lend a borrower, based on the information supplied and a credit check, before any property is chosen. It is a conditional statement of appetite, not a binding offer. The lender still has to underwrite the full application, verify the documents and value the specific property before it commits any money.
Does a mortgage in principle affect your credit score?
It depends on the search the lender runs. Many lenders use a soft search for an AIP, which is visible only to the borrower and leaves no mark that other lenders can see. Some run a hard search, which is recorded on the credit file and visible to other lenders for months. Several hard searches in a short window can look like distress borrowing. Always ask which type a lender uses before applying, and avoid collecting AIPs from multiple lenders for the sake of it.
How long does a mortgage in principle last?
Typically somewhere between 30 and 90 days, depending on the lender. The expiry exists because the inputs go stale: rates move, the borrower's credit file changes, and the lender's own criteria are revised. Renewing is usually straightforward, but a renewal is a fresh assessment — it can come back lower than the original if rates have risen or the borrower's circumstances have shifted.
Can a mortgage in principle be declined at full application?
Yes, and it happens regularly. An AIP is issued against self-declared figures and a credit check; the full application adds document verification, a full underwrite and a valuation of the property. Applications fail when declared income does not match payslips or accounts, when undeclared commitments surface, when the property itself is unmortgageable, or when the valuation comes in below the agreed price. The AIP was never a promise about the property, because no property had been chosen yet.
Should an agent accept an offer from a buyer with only a mortgage in principle?
Usually yes — an AIP is the normal level of evidence at offer stage in most markets, and demanding more can shrink the buyer pool. The useful discipline is to read it rather than just note that it exists: check which lender issued it, the date, the amount, and whether that amount plus the stated deposit actually covers the offer. An AIP for less than the offer, or one issued four months ago, is a fall-through risk worth raising before the property comes off the market.
Is a mortgage in principle the same as a pre-approval?
They occupy the same slot in the process but the terms are not interchangeable across markets. 'Mortgage in principle', 'agreement in principle' and 'decision in principle' are used mainly in the UK and Ireland; 'pre-approval' is the North American term and, at its stronger end, involves more document verification up front than a typical AIP does. What matters in practice is not the label but how much the lender actually verified before issuing it.
