Mortgage Declined After an Agreement in Principle
Has your mortgage been declined after an 'agreement in principle' was agreed? Our guide will show you all of your options to help you get approved!
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Author: Pete Mugleston - Mortgage Expert, MD
Updated: February 22, 2022
Receiving an agreement in principle (AIP) – also known as a mortgage in principle or a decision in principle – from a lender means that you’ve passed a major hurdle in the homebuying process. Having an offer accepted on a property means that you’ve passed another.
Unfortunately, your progress can still stall at the next stage.
If you’ve had a mortgage declined despite having an agreement in principle in place, this guide explains what you need to know before trying again.
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Why mortgage applications are declined after the AIP stage
You might be concerned that your mortgage application was rejected but there’s no need to panic. Understanding the issue makes it much easier to fix.
Usually, you’ll find that your application was declined for one of the following reasons:
Your circumstances may have changed
Any change to your financial situation since your agreement in principle can trigger a rejection.
If your income has fallen, your outgoings have increased, or you’ve missed a repayment on a loan, you may no longer meet the lender’s criteria.
Your lender’s criteria may have changed
Lenders can change their criteria for mortgage approval at any time, even between the moment you received your agreement in principle and the moment you made your final application.
Though your circumstances haven’t changed, your mortgage could still be declined.
Failing the credit check
Decisions in principle are typically given based on a soft credit check, which only reveals selected information.
Final decisions are based on a hard credit check, which is a complete search of your credit history.
New information discovered at this stage may result in rejection, especially if the lender finds severe bad credit on your file.
An error on the application forms
It’s easy to make minor errors when you’re filling out paperwork, but your mortgage could be declined as a result.
You may have provided inaccurate details
If the information your lender uncovers as part of their checks doesn’t match the details you entered on your application, this will raise suspicion of fraud and usually cause your lender to pull out of the agreement.
These are some possible reasons for rejection, but there are many others. In some cases, it will be possible to appeal the decision and work with the lender to agree on a deal.
This is best handled by a mortgage broker with experience in these types of negotiations.
In other cases, it won’t be possible to move forward with your chosen lender. But it’s not the end of the road, as there are many other lenders you can apply to.
Again, working with a mortgage broker could improve your chance of success.
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What to do if you’ve been declined after an AIP
There are certain things you should do – and others you should avoid doing – in this situation.
Here’s a step-by-step guide:
1. Don’t rush into a new application
It’s best not to make a new application until you know why your first application was refused and you’ve addressed the issue. Otherwise, you may continue to receive rejections for the same reason.
Each mortgage application results in a hard credit check, which is visible in your credit record. If a lender views your credit record and sees numerous recent hard credit checks, that can work against you (in combination with the other information they look at).
2. Find the right mortgage broker
You might think that all brokers have experience with all types of mortgages, but that’s not the case.
Working with a broker with experience with cases like yours can hugely increase your chances of approval.
They will know which lenders to apply to and may have access to mortgages that aren’t advertised to the public.
By using our free broker-matching service, you can rest assured that you’ll be pair with a mortgage advisor with the exact knowledge and expertise you need to get your plans back on track.
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What to do if your AIP is declined
It can also be disappointing to find out your application for a mortgage in principle has been declined but, again, this is a problem that a broker can help you to work around.
Unlike a rejection later in the process, a declined mortgage in principle won’t appear on your credit report so, in that respect, it is less serious.
You can take the same approach that we’ve outlined above.
Try to identify the issue (be it the size of your deposit, your household income, your age, or another factor).
Then, work with a broker to identify a lender that’s a better fit for someone in your position.
Get matched with a mortgage broker
If you’d like to speak to a broker who specialises in renegotiating when mortgage applications fail after an agreement in principle, we can match you with one.
Alternatively, if you’d like to speak to a broker who specialises in bad credit mortgages, low-income mortgages, self-employed mortgages, or any other niche you may fall into, we can help you with that too.
The brokers we work with have experience in a vast range of fields. Call 0808 189 0463 or make an enquiry to get your mortgage back on track.
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About the author
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!