Why Getting an Agreement in Principle Now Could Save Your House Move

The Rate Decision Everyone's Watching This Week

On Thursday, the Bank of England's Monetary Policy Committee meets again, and for the first time in months the conversation isn't only about whether they'll cut. Inflation crept back up to 2.9% in the latest figures, and markets have quietly shifted from pricing a cut to pricing the possibility of the base rate actually rising from its current 3.75%. Whatever the committee decides on the day, fixed rates have already been nudging upward over the past fortnight as lenders reprice against rising swap rates — the best two-year fixes are still around 4.40%, but that number won't sit still for long.

If you're planning to buy or remortgage in the next few months, this is exactly the kind of week that catches people out. You spot a house you love, put in an offer, and only then start thinking about your mortgage — by which point the rate you budgeted for in your head three weeks ago has quietly disappeared. There's a simple, free step that avoids most of that stress: getting a Mortgage Agreement in Principle before you start looking seriously.

What an Agreement in Principle Actually Is

An Agreement in Principle (AIP) — sometimes called a Decision in Principle or DIP — is a lender's initial assessment of how much they'd be willing to lend you, based on your income, outgoings, and a quick look at your credit file. It's not a formal mortgage offer and it doesn't bind the lender to anything once you make a full application. But it does two things that matter enormously in a market like this one: it tells you, in real figures, what you can actually afford, and it signals to estate agents and sellers that you're a serious, ready buyer.

Most AIPs take fifteen minutes to arrange and are valid for 60 to 90 days depending on the lender, which usually gives you enough runway to find a property without needing to renew it.

Why This Particular Week Matters

I'd normally say "get an AIP whenever you're serious about buying." Right now I'd go further. With rates moving and the market waiting to see what the MPC does on Thursday, an AIP does something extra: it gives you a rate you can hold in your head, and in many cases a product you can provisionally reserve, while you search. If fixed rates do creep higher over the coming weeks, having already established your affordability at today's numbers means you're not starting your calculations from scratch under worse terms. And if rates ease instead, nothing stops you shopping around again before you commit.

It also protects you from a very ordinary but expensive mistake: falling for a house that, once a lender actually looks at your finances properly, turns out to be £20,000 or £30,000 outside what you can borrow. Better to know that before you've fallen in love with the kitchen.

What You'll Need to Get One Sorted

Proof of identity and address (passport or driving licence, plus a recent utility bill or bank statement).
Evidence of income — payslips for employees, or two to three years of accounts/SA302s if you're self-employed.
A rough picture of your monthly outgoings, including any existing credit commitments.
Your deposit amount, and roughly where it's coming from (savings, gift, or the sale of another property).

You don't need all of this polished and ready — a good broker will help you pull it together quickly, and the AIP itself only needs enough for a lender to run an initial check.

The One Thing Worth Getting Right

Ask whichever lender or broker you use whether the AIP involves a soft or hard credit search. A soft search leaves no visible footprint and won't affect your credit score, which matters if you end up applying to two or three lenders to compare. A hard search does leave a mark, and doing several of those in a short space of time can actually work against you. This is one of the most common things I see catch people out — they get keen, apply with three different banks in a fortnight, and unintentionally dent the very credit profile that determines what they're offered.

Where I'd Start

If you already know you'll be looking to buy or remortgage before Christmas, this week — rate decision or not — is a sensible time to get an AIP in place. It costs you nothing, takes an evening's worth of paperwork, and means that whatever happens on Thursday, you're not finding out your budget for the first time with an offer already on the table.

If you'd like a hand pulling one together, or just want to talk through what you might realistically borrow before you start looking, get in touch and we'll sort it properly.

Kindest regards

Ian

Ian A Moore CeMAP — Director, IM Mortgage Consultancy Limited

Your home may be repossessed if you do not keep up repayments on your mortgage. IM Mortgage Consultancy Limited is authorised and regulated by the Financial Conduct Authority. This article is for general information only and does not constitute mortgage advice; rates and figures quoted were accurate at the time of writing and are subject to change.