Declined Agreement in Principle

Can a mortgage be declined after an AIP?

Yes. An AIP is part of the journey, it’s not the finish line. When an AIP is carried out, it’s just initial data entry and you’re not giving the lender any supporting documentation.

You haven’t given them your payslips, bank statements and they’ve not run that hard credit check. There’s no proof of ID or deposit, etc. You’ve only gone part of the way down the journey.

The next stage is to make a full application, supplying all that supporting documentation to prove everything to the lender. That’s when you share bank statements, your credit file, your employment contract or payslips. Equally, the property’s got to be valued and must be suitable security for a lender.

One of the most common post-AIP deal breakers is down-valuations, where the property is valued below the amount you’re paying. Another common one is where there’s a gifted deposit with an incomplete paper trail. The lender will want to know where that money is coming from, with ID for the donor.

If the AIP was done a while ago, sometimes people take out a new credit agreement which throws the affordability calculations out, or doesn’t meet the lender’s criteria. Those things do get forgotten. People do an AIP and then take a loan out for the deposit, not realising that will impact their ability to borrow for the main mortgage.

How many times can you apply for an AIP?

There’s no limit, but it could matter. A couple of AIPs over a few months is completely normal. But applying every week with different lenders can make you look a bit credit-hungry, even if the searches are soft.

It’s sensible to not have too many soft searches and agreements done in a short period of time. When you first start looking for a property, it’s good to work out what’s affordable and if you’d be accepted by a lender. You can get an Agreement in Principle to help with that.

Once you know you can get a mortgage, you can look for properties, and two or three months later you might find the dream home. Don’t do lots of AIPs in the interim. Leave it until the second viewing, maybe, and then get your AIP refreshed.

You don’t need to be constantly checking it. If your credit profile is unaffected and your income is fairly stable, nothing major should change.

How long does it take to get AIP approval? Is it a quick process?

It can be. It’s about getting your ducks in a row. Most brokers would want to verify the information and see those payslips, bank statements, ID and proof of deposit. We do that before submitting an AIP, to make sure we get a correct decision and the right result.

But if you’re organised, with all your information to hand, it literally is a case of that information coming in to us and being assessed. An AIP can generally be done in a few hours.

Equally, you could do your own on a lender’s website in a matter of minutes. But the important factor here is that the information you’re putting in needs to be absolutely accurate. If you don’t get the input right, you won’t get the right output.

How can I better my chances of getting my AIP approved?

Get organised. Check your credit against all the three major credit agencies, because sometimes they report things slightly differently. Make sure you’re clean across the board.

If you’ve got the ability to pay off any debt or reduce credit card balances, do. Make sure your deposit is traceable – where is it coming from? If it’s a gift, make sure the person gifting it can prove where the money has come from and can give us some ID. Avoid payday loans and short-term credit. Those are big ones at the moment.

Enter any bonus, overtime and allowances exactly as the lender requires – and this is where the experience of somebody assisting you comes in. We know how the lenders want that information and how they’ll treat it.

It’s just getting organised and making sure the information you’re putting in is accurate.

You’ve demonstrated how a mortgage broker can help. Have you got any final thoughts?

A broker can turn a blunt ‘computer says no’ into a reasoned human decision. That can make all the difference.

It’s about understanding which lenders to approach for your particular situation and how to interpret your data. That’s the main thing we can help with – and it takes away all the stress.

Key Takeaways:

• An Agreement in Principle (AIP) is an initial assessment, not a guarantee or promise of a mortgage, and can be declined due to issues with credit history, affordability, incorrect income entry, or missing information.
• If your AIP is declined, the most important step is to pause and find out the exact reason, as a fix may be as simple as correcting a data error, supplying missing documentation, or reducing a loan balance.
• Common reasons for a decline include missed payments, recent credit issues, undeclared borrowing (like ‘buy now, pay later’ agreements), recent drops in income, or forgotten high commitments such as childcare or car finance.
• A rejected AIP typically won’t affect your credit score since most lenders use a soft search, but applying for multiple AIPs in quick succession or repeatedly moving to full applications (which trigger hard searches) should be avoided.
• You can improve your chances of approval by getting organised, checking your credit with all three major agencies, reducing outstanding debts, ensuring your deposit is fully traceable, and entering all income information precisely as the lender requires.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.