Declined Agreement in Principle
- Independent Mortgage Advice from an award-winning broker
- No obligation consultations either face-to-face, online or over the phone
- We'll search thousands of mortgages from the whole of the market so you don't have to
What's On This Page?
Get In Touch
Declined Agreement in Principle
Lewis Shaw explains what happens if your Agreement in Principle has been declined.
Can an Agreement in Principle (AIP) be declined? Why?
Yes, Agreements in Principle can be declined – it’s not that uncommon. It can happen for a variety of reasons.
Each lender has their own particular scorecard, lending policy and rules you have to pass to be approved. If you don’t meet those then, of course, it can be declined. It could be that you simply failed the lender’s internal scorecard – which means you’ve not reached the number of points required with that particular lender.
Perhaps you have some adverse credit on your credit profile that you weren’t aware of. Or, you could be declined because you’re asking to borrow more than the lender is comfortable loaning to you. It may be a combination of those factors.
Many people assume that a credit score from Experian, Equifax or TransUnion is what lenders look at. But the vast majority of lenders have their own internal scorecards. We don’t know what those look like, as lenders don’t want us to obtain an unfair advantage.
If your Agreement in Principle is declined, it doesn’t mean there’s something wrong with your credit score. It’s simply the lender’s scorecard, and you haven’t quite met the requirements to be passed by them.
What happens if my AIP has been declined?
If your Agreement in Principle has been declined, we need to know two things. Did you do this yourself online, and could have input some information incorrectly? Online Agreements in Principle often aren’t particularly accurate and useful. A mortgage broker would find out why you were declined and help accordingly.
If it’s been done via a mortgage broker, it will be that you haven’t passed the scorecard or you aren’t able to borrow the amount of money requested. Sometimes a lender would accept you with a higher deposit – so it might be a decline, but the lender will state the deposit they might accept.
After a decline, the next step is simply to find a lender that will say yes. But in the main, we don’t tend to receive declines – because when we do the full assessment, we already know which lender to use and why. It’s part and parcel of our job to make sure you get approved.
But if you’ve been online to get a mortgage Agreement in Principle yourself and it has been declined, don’t panic. There often are options – we just need to understand why it was declined and take it from there.
Can a rejected Agreement in Principle affect your credit score?
Lots of people worry about their credit scores when getting Agreements in Principle – because of worrying things you may have read online. But an Agreement in Principle doesn’t affect your credit score, because most lenders use a ‘soft’ credit footprint.
That means you can see on your credit profile that they have searched but it doesn’t knock any points off – it’s not damaging.
However, a few lenders use a hard credit search. If you’ve been unlucky enough to do this yourself with one of these, it can indeed impact your credit profile if it’s rejected.
Can an Agreement in Principle be changed?
Yes, they can be changed. An Agreement in Principle doesn’t secure a mortgage or an interest rate, and it doesn’t guarantee that you will be granted a mortgage.
An Agreement in Principle is predominantly about passing checks on affordability, credit, ID and address, and going through a few policy rules. These might ask about how long you’ve been employed; how long you’ve lived at your current address; how much deposit you have saved up and your current credit commitments.
An Agreement in Principle is there to indicate what you could borrow and give you confidence that you will be able to get a mortgage. It doesn’t guarantee anything, though. It’s only ever as good as the information that has been put in, which is why it’s vitally important to do the preparation correctly.
That means speaking to a mortgage broker early in the process and providing all your documents. If the information is accurate, you’re halfway there.
Speak To an Expert
Can a mortgage be declined after an Agreement in Principle?
A mortgage can be declined after an Agreement in Principle, yes. It’s normally down to one of three reasons.
First is the valuation of the property. If the lender has been to value the property and decided that it’s not suitable security, or they don’t think it’s worth what you’re willing to pay, they could decline a mortgage at that point.
The second is that they’ve discovered something about your circumstances that only came to light after the full mortgage application. At this point they do that hard credit search and get more granular data.
If you’ve not been completely truthful and transparent and honest, the lender may have discovered something which they don’t like.
The third is that there may be an issue with the legal status of the property, which means the lender doesn’t want to lend at that point.
In the main, though, this doesn’t tend to happen as long as all the documentation and information you’ve provided to your mortgage broker has been complete, truthful, accurate and honest.
How many times can you apply for an AIP?
The majority of Agreements in Principle last for 90 days. Once you have one, it’s not particularly sensible to keep doing them. Even though it may not affect your credit profile, you don’t want to be sharing your data unnecessarily. In theory, there’s no limit to the number of applications, but there’s no reason to do that.
The best thing to do is measure twice, cut once. Provide the documentation, go through the full assessment, stick to the process and in a matter of weeks, you should find yourself the proud owner of a new home.
How long does it take to get AIP approval?
The process isn’t particularly long. We would have an initial chat with you and then a full consultation, which is typically between 60 and 90 minutes long.
Prior to that appointment, we would request all the documentation – ID, proof of address, proof of income, proof of outgoings, bank statements, a credit report and proof of deposit. In the appointment, we can go through all the details as necessary.
As long as there are no extreme quirks or super complexity from there, an Agreement in Principle can be done in as little as 30 minutes.
How can I better my chances of getting my AIP approved?
The biggest thing in getting an Agreement in Principle approved is simply to not hide anything. In the vast majority of cases where clients have difficulty, it’s because they’re misrepresenting something to a lender. It’s often that they’re not aware of an issue or they misunderstand what the lender is asking for.
Improving your chances comes down to speaking to a broker and being completely honest and upfront. Once we know the circumstances, we can deal with them.
As an example, imagine you go to a doctor feeling unwell, and he asks what your symptoms are. If you can’t describe them, it’s almost impossible to diagnose what’s wrong with you and prescribe treatment.
It’s exactly the same with a mortgage. If we know what your circumstances are we can prescribe the right lender and product. That’s all based upon you being completely open and honest with us.
What else do we need to know about overcoming a declined Agreement in Principle?
Mortgage brokers exist to make the process of buying a home as easy as possible. An Agreement in Principle is the right place to start, before you’ve even started looking at properties to buy.
Think of a mortgage broker as your guide. You’re currently at point A and you need to get to point B. The mortgage broker knows exactly the route to take: the most efficient and quickest way to go.
As long as you come on that journey with your broker, you’ll get to the desired destination. Be truthful and honest, and as long as you stick to the process, you’ll get where you want to be.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.