Typically, a mortgage agreement in principle can be secured within a day of discussion with a mortgage advisor. An AIP remains valid between 30-90 days post issuance. In case your AIP expires, you can easily have it renewed when you are ready to proceed.

What is an Agreement in Principle?

The term “mortgage agreement in principle”, also often referred to as “Agreement in Principle (AIP)”, or “Decision in Principle”, is where a lender confirms that based on your creditworthiness, you qualify for a specified mortgage. As soon as you have this agreement in principle and have considered some advice tailored for first time buyers in Newcastle, you can start house hunting.

As a first time buyer in Newcvastle, having an agreement in principle could aid negotiations, potentially leading to a reduced asking price, as sellers generally view those with an AIP more seriously, giving them confidence that you have the financial means to complete the purchase.

Will obtaining an agreement in principle affect my credit score?

Many clients are becoming more aware of what activities can negatively impact their credit rating. Applying for credit invariably involves a credit check. Any application for credit, be it a mortgage, personal loan, mobile phone contract, or car finance, necessitates these checks.

As an established and trusted mortgage broker based in Middlesbrough here at UK Moneyman Ltd, we do not conduct credit checks ourselves. However, with your permission, the mortgage lender will run such a check on your credit background.

Credit checks typically fall into two categories: a soft search or a hard search.

What is a hard credit search?

A hard search provides an extensive overview of your credit history, which can potentially affect your credit rating. All institutions that conduct a hard credit check are obliged to seek your consent prior to initiating the check.

The benefit of a hard search is that it provides the lender with a comprehensive insight into your financial status. If you meet their requirements, you stand a better chance of securing your mortgage, although it is not a guarantee. The downside is that hard checks leave a footprint on your credit file indicating that a hard credit check was undertaken. Multiple hard checks, especially in a short period, can negatively impact your credit rating and consequently, your chances of approval.

What is a soft credit search?

Contrarily, a soft credit check offers limited information about your credit status and is often used to verify your identity or by websites for offering quotes. Soft checks are less likely to impact your credit rating and increasingly, lenders are opting for soft checks initially. Soft checks are only visible to the person they are run against and therefore don’t carry the same risk of negatively impacting your potential mortgage application.

Is an agreement in principle a guarantee that I will get the mortgage?

While a mortgage agreement in principle does provide comfort, there is no absolute guarantee that your formal mortgage application will be approved. You will still be required to submit various documentation like identification, payslips, and bank statements for full review by the lender. Especially for self-employed applicants, the requirements may differ slightly.

Can I make an offer without an agreement in principle?

While there is no legal requirement, making an offer without a mortgage agreement in principle might not look favourable to the estate agent handling the transaction.

Date Last Edited: July 26, 2024