In order for customers to qualify for a mortgage, they will need to obtain an Agreement in Principle from the mortgage lender. The point of this is much as the name suggests; the lender will agree, in principle, to let you take out a mortgage with them.
This is done prior to the final checks and whilst it is not a guarantee that you will definitely get a mortgage, it is a good indicator that you are on the right track.
You may see this being called a Mortgage in Principle, a Decision in Principle, as well as the abbreviations AIP and DIP. Though it may seem confusing at first with all those names, they are all the same thing.
Once you have obtained your Agreement in Principle, you will be raring and ready to go, fully prepared to support any offers you make on a property as a First Time Buyer in Nottingham.
In having this to hand, you may also even open yourself up to the possibility of negotiating with the seller on a lower price. The reason for this, is because it demonstrates to the seller of the property you are looking to buy, that you are a serious buyer and do in fact have the funds to proceed.
We regularly find that more and more lenders are choosing to go with soft searches over hard searches. Generally speaking, a soft search will leave your credit score unaffected, as they tend not to leave a footprint.
Hard searches do leave a footprint, so having too many done can cause more harm than good, especially if you don’t pass each time. That’s not to say a soft search will never affect you, but it is not something that tends to happen often.
Soft searches don’t go quite as in-depth as hard searches, though you can rest assured that no matter which one the lender chooses to go with, they have their reasons and will choose the right one either way.
If you are not having hard searches done on a regular basis, then having one done shouldn’t really make too much difference. When it starts to become a problem is if you start having a lot of different hard searches taken out on you within a short amount of time.
It’s important to keep in mind though that if you are well aware that you do have a good credit rating, you should not feel put off by the idea of getting one done, especially if a hard search with that mortgage lender is going to be the best option for you.
Though we would like to say yes and fill you with hope, unfortunately even with an Agreement in Principle to hand, we cannot guarantee mortgage success.
The mortgage lender still needs to see all your documents and only after they have done that will an underwriter be able to make their final decision.
We tend to find that customers contact us after being declined at the point of application, as they have missed a lot of the small print that is mentioned in their Agreement in Principle.
You will need to provide your mortgage lender with proof of ID, the last 3 months payslips and bank statements to show how you handle your money, all before a lender will offer your case.
The required documentation is slightly different for Self-Employed Mortgage applicants.
Technically yes, you can make an offer without an Agreement in Principle to hand, though we personally believe you would be much better off having one with you.
Any credible estate agent will ask you for one of these before they do business with you, as they will want to know that you can go ahead with the mortgage process.
One of our dedicated mortgage advisors in Nottingham can typically obtain an Agreement in Principle within 24 hours of your initial appointment.
An Agreement in Principle will usually expire after somewhere between the 30-90 days mark. That being said, please be aware that you don’t just have to jump at the first house you see. Take time and take care when looking for a home.
If your Agreement in Principle expires, there are no worries. We can quite easily get you a new one once you are ready to make an offer on a property that is right for you.
Finding your dream home only to be declined by a lender can be both frustrating and disappointing. To counteract this feeling, we recommend getting an Agreement in Principle as early as possible, to ensure you are readily prepared for the process.
To learn more about what an Agreement in Principle is and how they can help, take a look at our YouTube video below.