How Long is a Typical AIP Valid For?

When it comes to securing a mortgage, an Agreement in Principle (AIP) can be an essential first step. But how long is an AIP valid for, and why does it matter? In this blog, we’ll answer all your questions about AIPs, including their validity, why they’re temporary, and what happens if your circumstances change.

What is an AIP?

An Agreement in Principle (AIP), also known as a Decision in Principle (DIP), is a statement from a lender that indicates how much you may be able to borrow based on your financial situation. It’s not a guarantee of a mortgage, but it’s a great first step in the home-buying process.

An AIP is typically based on information you provide to the lender, such as your income, credit score, and any existing debts. It can help you narrow down your budget and give you an edge when making an offer on a property. Think of it as a preliminary approval that shows a lender is willing to lend to you — subject to the final checks.

How Long is a Typical AIP Valid For?

Most AIPs are valid for around 30 to 90 days, depending on the lender. This gives you a set time to begin your property search or start making offers with some confidence. However, once that period expires, you’ll need to renew your AIP or apply for a new one. This is because your financial situation, or the mortgage market, may have changed since you first applied.

Why is an AIP Temporary?

An AIP is temporary because it’s based on the information provided at the time of application. Lenders want to ensure that the information they’re using to determine your borrowing capacity is up-to-date. Since factors like your income, outgoings, or credit score can change, the lender may need to recheck these before offering you a full mortgage. This temporary nature ensures that your mortgage offer will be based on current and accurate data.

Updating Your AIP

If your AIP is about to expire or you’ve found a property you like, it’s time to get your AIP updated. You can usually update your AIP by providing any new financial information to the lender. This might involve submitting updated payslips, bank statements, or confirming any changes to your circumstances.

If you’ve made significant changes to your financial situation, such as a change in employment, a pay rise, or additional debts, it’s a good idea to update your AIP to reflect these changes. This ensures that the lender’s decision is based on your most accurate and current financial picture.

What If Your Circumstances Change?

One of the key things to keep in mind when applying for a mortgage is that lenders are not just assessing your finances at one point in time — they’re looking at your overall financial stability. This means that any changes to your income, debt levels, or even credit score can impact the validity of your AIP.

If your circumstances change after you’ve received an AIP, it could affect how much you’re able to borrow or your eligibility for a mortgage. For example, if you’ve lost your job, increased your debt, or missed a payment, it’s crucial to update your AIP or even reapply. On the other hand, if you’ve had a pay rise, reduced your debt, or improved your credit score, you might find that your borrowing potential increases.

AIPs and Credit Checks

One common misconception about AIPs is that they don’t affect your credit score. In reality, most lenders will conduct a soft credit check during the AIP process, which does not impact your credit score. However, when you move to a full mortgage application, the lender will perform a full credit check, which can have a temporary impact on your score.

If you’re worried about multiple credit checks affecting your credit rating, working with a mortgage broker can be helpful. Brokers have access to a range of lenders and can often submit applications that reduce the number of hard checks on your credit file.

Working with a Broker

If you’re feeling uncertain about how your financial situation will affect your chances of getting a mortgage, working with a mortgage broker can be a great option. A broker can help you navigate the process, advise on when to update your AIP, and assist you in finding the best mortgage deals based on your unique circumstances.

At Need Financial Planning, we work with a wide range of lenders and can help you secure the right mortgage deal for your needs. Whether you’re a first-time buyer or remortgaging, we’re here to help you every step of the way.

Final Thoughts

An Agreement in Principle is an important part of the home-buying process, but it’s crucial to remember that it has a limited validity. By staying on top of the expiration date, updating your AIP when necessary, and working with a broker, you can ensure that your home-buying journey stays on track.

If you’re unsure about your AIP or need help navigating the mortgage process, get in touch with us today to book a free consultation. Let’s get you one step closer to your dream home!