When it comes to buying a home, getting an “agreement in principle” (AIP) from a lender can be an exciting milestone. Essentially, an AIP is a preliminary decision by a mortgage lender that confirms you are eligible to borrow a certain amount of money to buy a property.

However, even with an AIP in hand, there is still a chance that your mortgage application could be declined. In fact, research suggests that a significant percentage of mortgage applications are rejected after the AIP stage.

According to data from the mortgage broker Trussle, as many as one in five mortgage applications in the UK are declined after receiving an initial agreement in principle. This can be a devastating blow for hopeful buyers who have already invested time and effort into the process.

So why do so many mortgage applications get declined after an AIP? There are a number of factors that can come into play.

Credit history is a common reason for mortgage rejection. Even if you have been granted an AIP, your lender will still conduct a full credit check before approving your application. Any red flags on your credit report, such as missed payments or outstanding debts, could cause the lender to reject your application.

Another factor that can lead to rejection is affordability. Just because a lender has granted you an AIP for a certain amount of money doesn`t mean that you can actually afford to pay it back. If your income or expenses have changed since you received the AIP, the lender may reassess and decide that you no longer meet their requirements.

Employment status can also come into play. If you change jobs or become self-employed after receiving an AIP, the lender may view you as a higher risk and reject your application.

It`s worth noting that not all lenders follow the same practices when it comes to AIPs and mortgage applications. Some lenders may conduct more thorough checks at the AIP stage, which could lead to fewer rejections later in the process. Others may be more lenient with their initial approval, but then apply stricter criteria during the full application review.

If you`re concerned about the risk of mortgage rejection after an AIP, there are a few steps you can take to improve your chances. One is to make sure that your credit report is accurate and up-to-date, to avoid any surprises for the lender. You can also work to improve your credit score before applying for a mortgage.

It`s also essential to be honest and transparent with your lender throughout the process. If your circumstances change at any point, be sure to inform your lender as soon as possible. This will help them to accurately assess your eligibility and minimise the risk of a rejected application later on.

In conclusion, while an agreement in principle can be a positive step towards securing a mortgage, it`s important to remember that it`s not a guaranteed approval. By understanding the factors that can lead to mortgage rejection and taking steps to minimise your risk, you can improve your chances of a successful application.