When first time buyers in Newcastle embark on their journey of buying a property, there are crucial steps you need to take to ensure a smooth and informed process. Two important aspects you’ll encounter are the “Agreement in Principle” (AIP) and the concepts of “Hard” and “Soft” credit searches. These factors play a significant role in the mortgage application process. Here, we’ll delve into the details of what an Agreement in Principle is, how hard and soft searches differ, and how they relate to purchasing property in Newcastle.

The Benefits of an AIP

Obtaining an Agreement in Principle before you start house hunting in Newcastle can offer several advantages:

  1. Property Search: With an AIP, you’ll have a clear understanding of your budget range. This helps you narrow down your property search to homes that are within your financial reach.
  2. Credibility: An AIP demonstrates to estate agents and sellers that you’re a serious and qualified buyer. This could give you an edge in a competitive property market.
  3. Confidence: Knowing that you’ve been pre-assessed for a mortgage amount gives you the confidence to make offers on properties without worrying about financing hurdles.

Hard vs. Soft Searches: Exploring the Difference

Credit searches are an integral part of the mortgage application process, as lenders need to assess your creditworthiness before offering a mortgage. There are two types of credit searches: hard and soft.

A hard search, also known as a credit check or credit application search, is a comprehensive review of your credit history. It leaves a mark on your credit report visible to other lenders. When you formally apply for a mortgage, lenders will conduct a hard search to make a final lending decision. Multiple hard searches within a short period can impact your credit score.

A soft search, on the other hand, is a preliminary review of your credit history that doesn’t leave a visible mark on your credit report. An AIP often involves a soft search. Soft searches provide a general overview of your financial standing without affecting your credit score. However, keep in mind that if you proceed to a formal mortgage application, a hard search will likely be conducted.

The Connection: AIP and Credit Searches

When you obtain an Agreement in Principle, the lender typically performs a soft search to assess your eligibility for a mortgage. This soft search gives you an indication of how much you might be able to borrow. If you decide to proceed with a formal mortgage application, the lender will conduct a hard search as part of their comprehensive assessment process.

The Importance of Being Informed

First time buyers in Newcastle, understanding the nuances of Agreement in Principle and credit searches is essential for a successful property purchase in Newcastle. Securing an AIP empowers you to confidently explore the property market, while being aware of the distinction between hard and soft searches ensures that you’re mindful of your credit report’s health.

Date Last Edited: August 9, 2023