Obtaining an agreement in principle, also known as a mortgage in principle or decision in principle, is a crucial step in determining how much you can potentially borrow before applying for a mortgage.
Typically, a soft credit check is conducted to obtain an agreement in principle, which will not have any impact on your credit score. A hard credit check may be required in some cases.
It’s important to note that there is no obligation to proceed with a mortgage application after receiving an agreement in principle.
At Cardiffmoneyman, we can usually secure an agreement in principle for our clients within 24 hours of their initial mortgage appointment. It’s worth noting that an agreement in principle is usually valid for a period of 30 to 90 days, but it can be renewed.
Our expert team can guide you through the process of renewing your agreement in principle, providing you with the confidence to navigate the property market.
How do I get a mortgage agreement in principle?
In order to obtain an agreement in principle, you’ll need the help of a reliable mortgage broker such as Cardiffmoneyman, who can act on your behalf and communicate with the mortgage lender to obtain this document for you.
You can schedule a free mortgage appointment with one of our experienced mortgage advisors in Cardiff either by using our Get Started online form or by giving us a call.
During this appointment, your mortgage advisor in Cardiff will request proof of your income, employment, credit history, and other relevant personal information that will be useful in determining your eligibility for a mortgage.
Once you’ve provided this information, we are usually able to obtain your agreement in principle for you within 24 hours. This will give you an approximate idea of how much you may be able to borrow, allowing you to proceed with confidence on your home-buying journey.
When should I get an agreement in principle?
Obtaining a mortgage agreement in principle can be a wise decision before starting your property search, as it gives you a general idea of how much you can borrow. This will help you avoid wasting time on properties that are beyond your financial means.
Moreover, having an agreement in principle can give you an advantage when making an offer on a property. Sellers and estate agents may perceive you as a serious buyer, giving you an edge over those without an agreement in principle.
It is crucial to note that an agreement in principle is not a guarantee of a mortgage, but rather a useful tool in the home-buying process.
What information does a mortgage lender look at when you apply for an agreement in principle?
To obtain an agreement in principle, your mortgage advisor in Cardiff will need to collect some personal information from you to pass on to the mortgage lender. This information is used to determine the amount the mortgage lender is willing to lend to you.
The mortgage lender will require your full name, date of birth, current address, and the length of time you have lived there.
They will also need to know your employment status and how long you have been in your current job. Additionally, details of your income, including any bonuses or other sources of income, will be necessary.
Your regular outgoings, such as loans, credit cards, or car finance, will also be considered. Furthermore, your credit history will be checked to evaluate your creditworthiness, including your past credit accounts such as mortgages and loans.
Finally, based on the information provided, the mortgage lender will assess your affordability, taking into account your income and outgoings to calculate how much you can realistically afford to pay each month.
It’s important to note that the mortgage lender may require additional information, such as bank statements or proof of income if you are self employed, before making a final decision on whether to lend to you.
What is the difference between an agreement in principle and a mortgage offer?
An agreement in principle (AIP) is an initial document that outlines the amount a mortgage lender is willing to lend based on the information you have provided. It’s important to note that an AIP does not guarantee a mortgage offer, and there is no legal obligation.
A mortgage offer is a formal agreement from a mortgage lender that confirms they will lend you the necessary funds after conducting a thorough assessment, and is one of the final stages of the mortgage process.
Once it has been accepted, it becomes legally binding and sets out the terms and conditions of the mortgage, including the interest rate, term, and any fees or charges.
To reach this stage, you’ll need to provide more detailed information to the mortgage lender and undergo a comprehensive credit check. The mortgage lender will also require a property valuation.
After receiving the mortgage offer, you may proceed with your property purchase, provided that you meet any conditions stipulated in the offer.
Will having an agreement in principle taken out affect my credit score?
Typically, obtaining an agreement in principle for a mortgage will not significantly impact your credit score, as most mortgage lenders will carry out a soft credit check that won’t be visible on your credit report.
It’s important to note that some mortgage lenders may perform a hard credit check during the agreement in principle process.
This could leave a visible record on your credit report and potentially affect your credit score, especially if you’ve applied for multiple AIPs with different mortgage lenders within a short time.
It’s essential to keep in mind that a mortgage application generally involves a hard credit check, which can impact your credit score.
Therefore, it’s wise to limit the number of mortgage applications you make and only apply for an agreement in principle when you’re genuinely considering purchasing a property.
What is the benefit of having an agreement in principle?
Obtaining an agreement in principle (AIP) for a mortgage provides several benefits that can streamline the property buying process and enhance its efficiency.
Primarily, having an AIP enables you to have a clear understanding of how much you can borrow, which facilitates your search for properties that fall within your budget. This not only saves you valuable time but also helps you avoid the disappointment of viewing properties that are outside your price range.
Secondly, having an AIP can offer you a competitive edge over other potential buyers when making an offer on a property. Sellers may prefer to accept an offer from a buyer who already has an AIP, as it demonstrates that they are committed and actively seeking a mortgage.
Lastly, an AIP can expedite the mortgage application process once you find a property to purchase.
As the lender has already conducted a preliminary assessment of your financial situation and eligibility, they may be able to process your application more efficiently, thereby reducing the time it takes to receive the mortgage offer.
It’s important to note that applying for multiple AIPs with different mortgage lenders within a short period of time could potentially harm your credit score, as some mortgage lenders may conduct a hard credit check.
Therefore, it’s recommended to limit your applications and only apply for an AIP when you are genuinely interested in buying a property.
How much does a mortgage agreement in principle cost?
Obtaining an agreement in principle for a mortgage typically does not involve any fees or charges. It is simply a document provided by a mortgage lender that outlines the amount they are willing to lend to you based on the information you have provided.
It is important to note that an agreement in principle does not mean that you are financially obligated to continue, nor does it guarantee that you will receive a mortgage offer.
What happens if I get rejected for an agreement in principle?
In the event that your mortgage agreement in principle is declined, it indicates that the mortgage lender has determined that you do not qualify for the amount of mortgage you have requested. That said, there may be several reasons why this decision was made.
It is important that you ascertain why your application was declined and take appropriate measures to address any issues. This may involve improving your credit score, reviewing your financial circumstances, or supplying additional information to the mortgage lender.
Being turned down for an agreement in principle does not necessarily imply that your full mortgage application will also be rejected.
The mortgage lender will undertake a more comprehensive assessment of your finances and credit history when you submit a full application, and may propose a different amount or type of mortgage.
Furthermore, it is vital to understand that making multiple applications for agreement in principle with various mortgage lenders may adversely affect your credit score.
Therefore, it is recommended to conduct research in advance and consider working with a mortgage broker in Cardiff to help you find the appropriate mortgage lender for your situation.
Get a Mortgage Agreement in Principle
We would recommend that you speak with a mortgage broker in Cardiff before making any property offers if you are considering first time buyer mortgage in Cardiff or a home mover mortgage in Cardiff.
By obtaining an agreement in principle beforehand, you can determine how much you can borrow and narrow your property search to those within your budget.
As a mortgage broker in Cardiff, we can provide an AIP for you within 24 hours of your initial mortgage appointment, streamlining the process for you.
Book your free mortgage appointment today and let us help you to obtain your agreement in principle, as you head out on your mortgage journey with the support of a trusted mortgage broker in Cardiff.
Date Last Edited: December 6, 2023
