Mortgage Declined After Agreement in Principle

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What exactly is an Agreement in Principle, and how does it differ from a formal mortgage application?

An Agreement in Principle (AIP) is confirmation from a lender that they would theoretically lend you a certain amount of money, based on an initial assessment of your financial circumstances. It’s an indication that you are likely to get a mortgage, and can help you get your offer accepted on a property. 

With a formal mortgage application you provide detailed information and supporting documentation, including proof of income and ID. It’s a much more thorough assessment by the lender.

Can a lender legally decline a mortgage after an Agreement in Principle has been granted?

Yes, a lender can legally decline a mortgage even after granting an Agreement in Principle. The AIP is not a guarantee of mortgage approval – it’s a preliminary assessment. 

Usually a decline happens because the lender uncovers additional information during the formal application process that they weren’t previously aware of.

What are the common reasons for a mortgage declined after Agreement in Principle?

Common reasons for a mortgage being declined after an Agreement in Principle include:

  • Your income doesn’t meet the affordability criteria
  • There are issues with credit history or credit score
  • The lender finds discrepancies in the information provided
  • The lender’s criteria changes
  • The property is valued at a sum much lower than the sale price
  • The way the property is constructed falls outside the lending criteria

What are some common errors or inaccuracies that applicants make on their mortgage application, and how can these be avoided?

Common errors on a mortgage application include:

  • Providing incorrect financial information
  • Not disclosing all existing debts or financial commitments
  • Failing to include all sources of income
  • Inaccurately representing employment details. 

To avoid these errors, you should make sure you provide accurate and up-to-date information, and double-check all the details before submission. Or, work with a mortgage adviser or broker – we will check all these details before you make the application.

Do applicants need to reapply all over again if they’ve been declined after an AIP?

If you are declined after an AIP, you don’t always need to reapply all over again. The key thing is to understand the reason for the decline so you can address any issues before going back to the lender. 

If a specific lender has declined an applicant after an AIP, what can you do to increase their chances of getting approved by a different lender?

It will depend on the reason for the decline – addressing that issue is the priority. But it may be helpful to improve your credit score, provide additional supporting documentation, or find a lender with more flexible criteria. 

Your mortgage broker will talk you through what needs to happen to get your next application approved. In some cases, it might just mean waiting a few months.

Can lenders change their criteria after issuing an AIP?

Yes – lenders can change their criteria as often as they wish. Market conditions, regulatory changes or internal policies can affect their criteria. Because of that, the terms offered in the AIP are not guaranteed.

Are lenders required to provide an explanation for a decline after an Agreement in Principle?

While lenders are not legally required to provide an explanation for a decline, they will often supply details, especially to a mortgage broker that they work with regularly. That will help you understand the reasons behind the decision and make any necessary improvements.

Is it possible to appeal against a mortgage declined after Agreement in Principle, and how do I go about doing this?

Yes – it’s possible, depending on the lender’s policies. The first step is to contact the lender to discuss the reasons for the decline and explore what the potential options are.

What role do credit reference agencies play in the mortgage application and decision-making process, and how can applicants access their own credit reports for free?

Credit reference agencies play an important role, because lenders use their reports to assess an applicant’s creditworthiness. You can access your credit report for free, direct from the relevant credit reference agencies. 

We recommend a provider called Checkmyfile.com which allows you to see details from all the major agencies in a single report. 

What happens if I have a down valuation after getting an Agreement in Principle?

A down valuation means that the lender’s valuation of the property is lower than the asking price. It will usually impact the mortgage offer. The lender may be willing to lend a lower amount, which means you will need to contribute a larger deposit. 

It may be possible to negotiate with the lender, challenge the valuation or seek a second opinion on the property’s value. We will help you decide what’s best.

How does a declined mortgage application impact the applicant’s credit score, and what steps can be taken to mitigate any negative effects?

Each application typically results in a ‘hard search’ on your credit report, which can lower the credit score temporarily. 

The report will only state that you applied for a mortgage, not whether it was approved. Generally one or two searches isn’t a problem, but numerous searches can suggest you have been declined, which can negatively affect your score for longer.

How can changes of lender criteria impact the applicant’s chances of getting a mortgage approved after an AIP?

Changes in lender criteria can have a big impact on your chances of getting a mortgage approved. If the criteria become more stringent, it could limit the options available. 

A good broker will keep up with changes in lender criteria, so that we can identify suitable lenders at the point when you’re ready to apply.

What are the potential pitfalls of getting an Agreement in Principle, and what factors should applicants keep in mind when seeking pre-approval for a mortgage?

Pitfalls to watch out for include:

  • Assuming that an Agreement in Principle guarantees mortgage approval
  • Not fully understanding the terms and conditions associated with the AIP
  • Relying solely on the AIP without comparing offers from different lenders
  • Not being prepared for the formal mortgage application process

Your broker will explain that an Agreement in Principle is not a binding commitment. We’re here to help you understand the mortgage process and find the right product for your circumstances.

What steps can applicants take to improve their credit score and increase their chances of getting a mortgage approved in the future?

The best ways to increase your chances of getting a mortgage approved are to:

  • Make sure you’re listed on the voter’s roll at your address.
  • Pay bills and debts on time
  • Reducing outstanding balances on credit cards and loans
  • Avoid new credit applications unless absolutely necessary
  • Correct any errors on your credit reports
  • Maintain stable employment
  • Get guidance from a mortgage advisor.


What are the advantages of working with a mortgage adviser who has experience in dealing with declined mortgages?

We have a good understanding of the reasons behind mortgage declines and we know which lenders are more flexible in their criteria. In addition, we have access to a wide range of mortgage products. 

We’re here to guide you and help you identify any issues early. That will increase the chances of finding suitable mortgage options.

Is it advisable to rush into a new mortgage application, or should applicants take the time to find the right mortgage broker?

Rushing can lead to overlooking important details or not exploring all available options, which could mean paying more than you need to.

A mortgage is a major financial commitment that will potentially be with you for 25 to 30 years. It’s important to take time to get it right. We will guide you through the process, assess your individual circumstances and provide personalised advice. 

What is the difference between using a mortgage broker and applying directly with the lender?

A mortgage broker acts as an intermediary between the applicant and multiple lenders. We assess your needs and then search for suitable mortgage products from across the market. 

Applying directly with a lender limits you to just their products, which may not be the most competitive on the market – and may not suit your specific needs. 

Let us take the stress out of getting a good deal. We’re here for much more than the mortgage. We will take you through the whole process, from setting your property budget right up until you get the keys for your new home.

Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. 

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