Get Your Buy-To-Let Mortgage Agreement In Principle (AIP) in Minutes

What is a Mortgage Agreement In Principle (AIP)?

Also commonly known as Decision in Principle (DIP) or Mortgage Promise, an Agreement in Principle (AIP) is a lender’s initial estimate of how much they may be willing to lend based on a basic financial assessment.

To be clear, an AIP is not a guaranteed mortgage offer, it only serves to provide an indication of affordability. By providing basic information about your finances, lenders can assess your affordability. It is not the same as an official mortgage offer, which only comes after thorough verification and due diligence from the lender. So, for all intents and purposes, a lender may not lend you the amount shown in your AIP, especially if the information you submitted cannot be verified.

Key points

• An AIP is not a guaranteed mortgage offer, it only provides an estimate of affordability.
• Lenders assess affordability using rental income (or expected rental income) or basic household income and expense details (depending on whether you’re purchasing a buy-to-let or residential property), but without full verification.
• A formal mortgage offer comes after thorough checks and due diligence.
• The final loan amount may differ from the AIP if submitted information can’t be verified.

Why get a Mortgage Agreement In Principle (AIP)?

• Know your budget – Helps determine how much you can borrow, so you can set a realistic budget.
• Stronger buyer position – Shows estate agents and sellers that you have financing in place, reducing the risk of collapsed deals due to financing issues (which is one of the main reasons for chains crumbling).

How reliable is a Mortgage Agreement In Principle (AIP)?

Honestly? I’ve heard mixed stories. Some horrifying, that have shattered hearts and dreams.

While I think it’s always worth getting one, the reality is, there is some truth in the fact that they’re often not worth the paper they’re written on.

Many buyers have found that their actual mortgage offer is nowhere near what their AIP suggested. That’s because the AIP is based on basic, unverified information, and things can change once lenders dig deeper, and starting sniffing around.

Bottom line: you’d be wise not to put 100% faith in your AIP – treat it as a rough guide, not a guarantee (because that’s exactly what it is!).

Do I need a Mortgage Agreement In Principle (AIP) to get a mortgage?

Nope.

You can bypass the step and apply for a formal mortgage offer from the get-go. But that would be super bonkers, in my opinion.

Honestly, if you need a mortgage to buy a house, I don’t see how you can be serious about it without getting one first. They’re accessible for free and don’t take long to acquire, so there are no excuses.

Should I get my Mortgage Agreement In Principle (AIP) from Habito?

You can get an AIP from any lender and most brokers.

I enjoy Habito for the reasons mentioned, plus a few more:

• The entire process is fully online
• Takes just a few minutes (as long as you have your finances ready to punch into their application form)
• Instant download of your AIP
• No credit check (unlike many lenders, which may run a check and cause delays)
• Habito is a whole of market mortgage broker, so they have access to thousands of mortgage products from all lenders, meaning they might find a lender willing to offer you more.

You can register with Habito for free to get an AIP (they don’t charge you for any of their services because they get paid by the lender).

Landlord out xo