Declined Agreement in Principle
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Declined Agreement in Principle
Massum Ali and Ross Brown explain what happens if an Agreement in Principle is declined.
Podcast approved by The Openwork Partnership on 11/07/2025.
Can an Agreement in Principle (AIP) be declined? What happens next?
Ross: Yes, an AIP can be declined for many reasons. It could be that a credit check finds something adverse on the client’s file, or something to do with affordability.
If it does get declined, we would check that the information in the system has been input correctly. Then, we would discuss it with the lender, as they can often provide further details. Sometimes we get information directly on the screen explaining why it’s declined.
Once we know why it has declined, we can look at the client’s credit file – if we haven’t already. That can help us figure out where it’s gone wrong and look at the next steps.
Why has my AIP been declined? Why could this happen?
Massum: It could be one of many reasons – we’d ascertain what that was. Predominantly, I find that when an AIP is declined, it’s due to adverse data with the credit report agencies.
Normally as a mortgage broker, we’d check the credit report before we apply to avoid that happening. But sometimes the credit reference agencies we check don’t pick up everything.
There are other reasons, such as undeclared commitments. Of course, we discuss with our customers what their big commitments are – such as credit cards or personal loans, for example.To avoid a decline, try to be open and honest with your broker. Get all the information out beforehand.
Can a rejected Agreement in Principle or AIP affect your credit score?
Ross: Yes and no. Most lenders offer a soft footprint on the credit file at AIP stage, whereas some lenders still do a hard footprint which goes on the file.
As brokers, unless you specifically need to use a lender that does a hard footprint, we try to avoid those so that it doesn’t adversely affect your credit file.
We also recommend minimising how many AIPs you do, to reduce the impact on the credit file. There are scenarios where we need to work with a lender who only does a hard footprint, and in that case it’s even more important not to do too many AIPs. One or two will be fine, but anything over that can start to affect your credit score.
Can an Agreement in Principle be changed?
Massum: Yes, and actually that’s quite common. Often when I speak to customers, they’re out house hunting and they’ll give me the value of the home they are looking to buy.
Then, when I speak to the customer a month later, they might want to make an offer for a more expensive property. We’d go back into the system and amend the total of the loan we need to apply for – that’s completely possible.
A lot of AIPs are valid for three months. If a customer is returning to us, we always check whether they have changed any of their details. Do they now earn more money? Have they changed their credit situation? Quite a few things could change in between. We would go back in and amend it – that’s quite simple to do.
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Can a mortgage be declined after an Agreement in Principle?
Ross: Yes, unfortunately. An Agreement in Principle is a conditional agreement from the lender based on the information that we provide. It says that they’re willing to lend to you based on the data we’ve put in around your income, credit score and other borrowing factors.
There are various ways an application can then be declined – for example, if the paperwork and income status doesn’t add up with what we’ve input into the AIP stage. Obviously, that shouldn’t happen, because the broker should be doing their job to make sure that pay slips correspond with the figures that they put in the AIP.
However, there can be discrepancies if a lender isn’t willing to accept certain forms of income – such as overtime, commission or bonus payments, where we thought initially they would.
There could be problems with the property and its valuation issues. Obviously, from an affordability perspective and a client perspective, everything could be fine. But if there’s something wrong with the property, the application can get rejected on that basis.
There are also scenarios where credit score can drop. If an AIP is done for a client on the 1st of June, for example, but they don’t find their property until the end of June, anything can happen within those 30 days.
The client could miss a payment and default on a credit card, or a loan or mortgage. On full application that would fail – because something untoward happened within that period of time. Other issues can be linked with affordability and incorrect or incomplete information.
How many times can you apply for an AIP?
Massum: Actually, it’s unlimited. There’s no restriction on how many times you can apply for an Agreement in Principle. A lot of them are valid for three months but, especially in the current environment, you might not find a home to buy within three months. When your AIP expires, you need another one and we’ll get that done. There’s no real limit.
As Ross said earlier on, some lenders do a hard credit check for an AIP. Doing another hard credit check could potentially have an adverse effect on your credit report, which is why it’s important to apply to lenders that do soft checks.
How long does it take to get an Agreement in Principle approved?
Ross: Initially we’d look to do a fact-find with the client to obtain all their data. We’ll need that for the Agreement in Principle. Getting the AIP then is actually very quick – literally just 15 or 20 minutes. Most lenders will give you an answer there and then on whether it’s been accepted or declined.
Some cases are referred, which means an underwriter needs to review it. Normally we’d hear back from that within 24 to 48 hours on whether it’s been accepted – although every lender has slightly different timescales.
How can I better my chances of getting my AIP approved?
Massum: For a lot of First Time Buyers, that’s a pertinent question. We’re looking to apply for the largest loan you’re probably applying for in your lifetime. So to be prepared for that, try and think about reducing your commitments in the months leading up to this.
If you’ve got credit cards or personal loans, would it be possible to bring them down to zero? Then, when we do an Agreement in Principle, there are less things in the background for the lender to potentially have an issue with.
If you’ve had any blips on your credit report, like a default or a county court judgement (CCJ), lenders often have criteria around how long you need to wait before applying for an Agreement in Principle. So, in the months leading up to this, think about how you can make sure things are clean.
How can a mortgage broker help here? Have you got anything else you’d like to add?
Ross: As Massum’s just said, there are lots of ways to better your chances for the AIP, and that’s the kind of advice we give a client in their first meeting. For people listening to this podcast, that’s great. You’ve got the advice here.
But a lot of clients walk through our door without that information and we’re here to help. We look over their credit files and if there are any issues, we explain how to move forward. Our expert advice definitely helps people get into a good position.
We have access to multiple lenders and understand their criteria. We tailor our recommendations to make sure that a client is going to the most appropriate lender, giving them the right chance of being accepted.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Approved by The Openwork Partnership on 11/07/2025.
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