The first step in obtaining a mortgage is to arrange an agreement in principle with a mortgage provider, but how do you go about that and what does it involve?
The mortgage industry is infamous for jargon and it is not uncommon to have a few names for the same thing. This initial stage in the process of applying for a mortgage can be known as; Decision In Principle (DIP), Agreement In Principle (AIP) or a Mortgage Promise… they are all the same thing.
When purchasing a new home or raising funds on an existing home, a decision in principle is the best place to start. At this stage, a mortgage adviser will input information about you, your income and your credit details as well as some key information about the possible mortgage you wish to apply for into a lender’s online system.
The lender will then run a credit search, and in most cases, this credit search will be what is known as a ‘soft search’ which means only you and the lender who searched can see it, this is so it will not harm your credit score. They also check over your details to make sure you fit certain areas of their criteria such as affordability and then produce a result. The decision in principle will either return as a pass, decline, conditional pass or refer. If you receive a conditional pass the lender may have cleared you on credit score but may need supplementary information or offer you a different loan amount. If you receive a refer the lender will pass the application over to an underwriter to check over the information in detail to then give a pass or decline decision.
Mortgage Promises are not legally binding and you are free to move to a different lender if you do not get the result you wished for or if your circumstances change.
Many Estate Agents will require you to have a decision in principle before being able to put forward an offer to buy a property. Remember, it is a legal requirement for an Estate Agent to forward all offers to sellers, but without a decision in principle you would not be considered as being in a good position to buy and the seller may not wish to accept your offer until they know you have a mortgage agreement in place.
So,“how do I get an agreement in principle?”its simple… the best place to get a decision in principle is through an independent whole-of-market mortgage adviser. With their expert knowledge, they will know the best lender for your situation and will be able to organize the whole thing for you. Some banks are taking up to a month to book mortgage appointments and that appointment can take up to 3 hours.
Your Property Genie can help you secure a mortgage in principle so you can begin your home search. Our services are designed for anyone looking to buy or purchase a property in the UK whether you’re a First Time Buyers or Buy to Let Investor.We arrange mortgages, surveyors, solicitors and local tradespeople, you only need to deal with one company.
We’ll take care of it all – We aim to Save Hassle, Save Time and Save Money for you.
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