Once you pass your lenders credit score and have qualified for a mortgage, you will receive an agreement in principle or more commonly known as an AIP. With an AIP in place, you are able to make an offer on a property. They will also come in handy for asking price negotiations, as the seller now knows that you are serious and ready to start the home buying process.
There are two main ways that a lender will access your credit score, the type they choose is entirely up to them. They will factor in lots of different things, this includes reliability, your deposit size, etc.
The two ways a lender can assess credit score are through a soft credit search and a hard credit search.
Soft credit searches are a lot more common these days, they are much easier for lenders to carry out. They are easier to carry out because they need less information out of it. If lenders perform a soft credit search on your file, it also won’t damage your score, it will leave it unaffected.
Whilst your financial institution will gain less information about you by choosing a soft credit search over a hard credit search, an agreement in principle from one of these lenders is usually still an extremely strong signal that your full application will be accepted.
Hard credit searches go much more in-depth than soft credit searches. The main difference between the two is that hard credit searches can affect your credit score. Anyone who looks at your file in the future will be able to see that you had a hard credit search performed on you.
This won’t really affect you if your credit score is high. If your score is lower and you have more than one hard search on your file, it could look like you are trying to apply for lots of credit at the same time.
You will never be guaranteed a mortgage, however, securing an AIP will definitely help. Once you have provided your lender with all of your documents, an underwriter will make a final decision. An AIP usually includes a small print that can easily be missed. When customers reach out for help about their agreement in principle, in some cases we find they’ve been turned away at full mortgage application stage.
The documents required include ID, payslips, bank statements, etc. As your expert Mortgage Broker in Cardiff, we take pride in helping you get all of this ready.
If you are lucky you can just about get away with it, however, most estate agents will want you to provide evidence that you are able to proceed with the purchase.
Normally, your AIP will need renewing after around 30-90 days. As a Mortgage Broker in Cardiff, we strongly recommend that you get one in place as soon as possible. You don’t want a situation where you have found your dream home but can’t actually apply for it because you don’t have an agreement in principle in place.
If it’s starting to expire, don’t rush a purchase as you can renew your AIP very easily. So don’t buy a house for the sake of it, make sure it right first.
Did you know that we can usually turn around an agreement in principle for you within 24 hours of your mortgage application! This is incredibly useful if you are a First Time Buyer who has found their dream first home and want to put down your deposit straight away. Even if you are Moving Home in Cardiff, having an AIP within 24 hours could prove extremely beneficial.
On top of this, we also offer a free mortgage consultation, so don’t hesitate to get in touch today to claim this offer. We can’t wait for you to get in touch with your expert Mortgage Advisor in Cardiff.