Get a Mortgage Agreement in Principle, by Matt Stevens
There are an array of things which you can do to make securing that dream home easier like, improving your credit score, saving up for a sizable deposit, and just generally having a degree of personal and financial stability attached to your mortgage application.
However, another facet of the entire process to be aware of is a mortgage agreement in principle (AiP), sometimes referred to as a mortgage in principle (MiP), a decision in principle (DiP), or an approval in principle (AiP).
Getting an AiP represents a fundamental step towards achieving housing happiness. So that you can inform yourself on the subject, we’ve put together this piece which offers some guidance in the area.
What is a mortgage agreement in principle?
A mortgage agreement in principle is an indication that you are able to afford to borrow the amount which you need in order to buy a property, or instead, remortgage.
If you get an AiP, then providing it serves as proof to potential lenders that your finances are inline with the house or flat you’ve chosen for purchasing.
When should I get a mortgage agreement in principle?
Ideally, it’s best to have a mortgage agreement in principle before you begin definitively searching for properties. This is because the majority of estate agents will ask whether you currently have an AiP, given that it helps them to know if you’re prepared.
Having said this, if you’re still looking around to find out what you can get within your means which matches up to your requirements, then it’s not essential to have an agreement in principle so soon. Instead, you can simply get a quote regarding what sort of figure a lender would offer you at present.
How long does a mortgage agreement in principle last?
Generally, an agreement in principle lasts for 90 days, i.e., around 3 months. Albeit, the length of this period is ultimately decided by the lender, with some covering only a single month (30 days).
This assumes that there has been no changes in your income, spending habits, or debts you may have since the date when you received the AiP. If such a case applies to you, or your AiP expires, then you should/can reapply.
Does a mortgage agreement in principle affect your credit score?
It depends. To assess your eligibility when you apply for a mortgage agreement in principle, the lender will run a credit check. If they check your credit file using a hard credit check, then this indeed will leave a mark that can be seen by other lenders. Moreover, multiple hard credit checks in a short span of time will negatively impact your credit score.
As such, if you want to get a notion of your current suitability before you apply, you can use our free credit check tool (£14.99 per month after the free 30-day trial). Using it will help you to seek out any possible mistakes or fraudulent activity on your profile, so that you can deal with such problems as soon as possible. The trial and subscription can be cancelled at any time.
On the other hand, if the lender carries out a soft credit check, then a footprint won’t be left on your report, nor will your credit rating be affected.
Can I get a mortgage agreement in principle if I have bad credit?
Yes, you can get a mortgage agreement in principle if you have adverse credit, as signalled by past financial problems. Though, admittedly, your options will be slightly more limited as opposed to if you had an excellent credit rating.
Details concerning your credit history that will affect your chances of getting an AiP include if you’ve ever had a court county judgement (CCJ), an IVA, if you’ve been recently rejected, or if you’ve previously failed to meet payday loans or claimed bankruptcy. Though, their influence will be lessened if they occurred more than 6 years ago.
In essence, you will still be subject to the same aspects of the usual mortgage application process despite only applying for an AiP. Likewise speaking to a mortgage broker will heighten your chances of approval significantly.
Does an agreement in principle guarantee I’ll get a mortgage?
An agreement in principle does not guarantee that you’ll be offered a mortgage loan. The purpose of an AiP is to give you an idea of what you can expect to be offered from a lender.
Although the application process for an AiP is comparable to that of a regular mortgage application, it remains that the lender will need to verify the details of the AiP if you have one.
Therefore, the information contained by an agreement in principle makes up part of a mortgage provider’s checks to see if you fulfil their lending criteria, rather than being a borrowing guarantee. After all, there are other factors which influence a lender’s decision such as interest rate changes alongside possible changes in your personal circumstances.
What are the benefits of getting a mortgage agreement in principle?
While not mandatory, getting a mortgage agreement in principle is often recommended for the inherent benefits they bring.
Namely, having an AiP means you can start to view properties with a more refined understanding of what you can actually afford, in addition to showing sellers and estate agents that you are a serious potential buyer.
In this way, AiPs offer reassurance for both parties. This can be especially helpful if you’re a first-time buyer.
How do I get a mortgage agreement in principle?
There are two pathways for getting a mortgage agreement in principle. Either, you can go directly to the lender you’re likely to get a mortgage from, or you can speak to a mortgage broker.
The former of the two can feel more convenient, but it will take longer and your mortgage options will be relatively limited as a result of narrowing your lender down to a single choice. Albeit, getting an AiP from a mortgage provider won’t categorically tie you down to that specific lender.
Whereas, if you go to a mortgage broker then they will present you with a wide range of deals you are eligible for, so that you can select the best one for your personal situation and financial circumstances. On top of this, mortgage brokers will be able to arrange an AiP almost instantly.
We at The Mortgage Genie have helped many of our UK clients to get a mortgage agreement in principle. We have the experience and market knowledge to ensure that you get the mortgage product that’s right for you, as well as to guide you through the entire process from beginning to end. If you’re in need of a team of expert mortgage brokers, then be sure to get in touch with us at 01915809890 today. And why not see how much you could borrow up to right now by using our mortgage calculator?