What is a mortgage Approval in Principle?
An Approval in Principle (AIP), is a letter from a lender showing the amount they could lend you, based on some initial checks.
It’s free to get an AIP and it’s usually valid for six months. It can be extended quite easily if your circumstances haven’t changed during that time.
An AIP is also known as:
- A Mortgage in Principle (MIP)
- A Decision in Principle (DIP)
- An Agreement in Principle (AIP)
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Who is it for?
Whether you’re at the start of your mortgage journey as a first-time buyer or moving house, a mortgage Approval in Principle is useful for a range of circumstances, such as:
- Buying a new property
- Remortgaging your home
- Building your own property
You can find out how much deposit you’ll need in our mortgage deposits guide.
Why do you need an Approval in Principle?
If you make an offer on a property, you’ll have a better chance of success if you have a mortgage Approval in Principle. This is because it shows you’re likely to be approved for a mortgage.
It isn’t a guarantee of a mortgage or a particular deal at this stage, but it can help to show you’re a serious buyer and some estate agents may request to see it.
An Approval in Principle confirms how much you can borrow with a mortgage and this will help you to stay within budget when you:
- Search for properties
- Plan renovation work
- Design and build a new home
How to get an Approval in Principle
Firstly, search for the best rates and mortgage deals using our comparison or via a mortgage broker to find the best deal.
Once you’ve found a mortgage deal you can either apply for an AIP via a mortgage broker (mortgage credit intermediary) or directly to the lender.
The quickest way to apply is online but if you prefer you can make your application over the phone or in branch.
You won’t have to produce all the documentation needed for a mortgage to get an AIP, but they’ll need to verify your identity and require information about your:
- Income and spending
- Dependants
- Existing property (if you have any)
They will also run some eligibility checks. One of these includes a credit check which looks at your credit history. This is usually a ‘hard search’ which is recorded on your credit report.
It’s usually a quick and simple process and you’ll normally get a decision within 10 working days.
What happens if you don’t get approved?
If one lender doesn’t approve you, it doesn’t mean they all won’t, but it’s best to understand why before you try another one. If they haven’t supplied you with a reason, ask the lender for more information about why your application was rejected.
If you don’t pass the credit check
Ask your lender why and request your credit report for free on the Central Credit Register website and if it contains something you disagree with, here are your rights.
Our guide to checking your credit record can help you to understand and improve your credit report.
Avoid reapplying for an approval in principle until the issues with your credit have been resolved.
If you’re approved for less than you need
This is likely due to one of the following reasons:
- Salary is too low
- Credit rating is poor
- Current outgoings are already high
If you have a loan for example that still has a long time to run before it’s paid off, this will affect how much you can afford to pay for your mortgage.
How to improve your chances of approval
To improve your chances of success or being offered the amount you need, you could:
- Save for a higher deposit
- Ensure you credit record is accurate and up to date
- Clear any debts or reduce an outstanding loans
- Make any loan and/or credit card repayments on time
- Reduce your outgoings where possible
Our mortgage deposits guide shares some tips on ways to save and reduce your living costs.
What should you do next?
Not all lenders have the same lending criteria, so you could search for another lender who may approve you.
A mortgage broker (mortgage credit intermediary) can help you find lenders that are more likely to lend to you based on your circumstances.
If your credit history isn’t that good, our bad credit mortgages guide shares tips and advice on how to improve your chances of getting a mortgage.
How to get a full mortgage offer
To convert your AIP into a formal mortgage Letter of Offer you must fill in a full mortgage application and answer a more detailed set of questions about yourself, your financial circumstances and the property you’re planning to buy.
You’ll need to produce various documents that prove your:
- Identity
- Earnings
- Employment type
- Outgoings
When everything has been verified by the lender and all their requirements have been met, you’ll be issued with the Letter of Offer. This includes the full terms of the mortgage that you must check over with your solicitor and sign, usually within 30 days.
Once you have a full mortgage offer and you’ve found your dream home, you’re ready to make a move.
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Find the best first time buyer and home mover mortgage deals in Ireland using our comparison.
Mortgage Approval in Principle FAQs
Does applying for an Approval in Principle affect my credit rating?
If you apply for an approval in principle from multiple lenders, they will each have to run a credit check - usually a hard search that shows on your credit report.
Having lots of credit checks showing on your credit report in a short space of time can have a negative impact on your credit rating. This is because other lenders can see these checks have been made and will assume you’re struggling to get credit.
If the credit check uses a soft search, it won’t show on your credit report or affect your credit score.
Do I have to get a mortgage Approval in Principle?
No. Not all estate agents will request one but it can make you a more attractive buyer by having one.
If you don’t get one, you’ll still need to check how much you can borrow e.g. by using a mortgage calculator.
You can also request a copy of your credit report on the Central Credit Register website for free, to make sure there’s nothing showing that a lender might question.
What's the difference between Approval in Principle (AIP) and a full mortgage offer?
For an Approval in Principle (AIP), you’ll need to answer a few questions about your financial situation and based on the information you give, the lender will tell you how much you could borrow.
However, an AIP is not a legal document and does not entitle you to receive the mortgage amount set out in the AIP.
To secure a full mortgage offer, you must answer a more in-depth set of questions about yourself (and any other applicant) your finances and the property you would like to buy.
You’ll need to provide evidence of all your financial information and the lender will carry out the necessary credit checks before giving you a formal underwritten credit approval.
