MORTAGE OFFER

This really comes down to how soon you are looking to move. An agreement in principle (AiP) can run out after 6 months of being issued – but you need to know you can obtain your funds prior to falling in love with your dream home. AiP can also affect your credit rating as it can require a hard credit search – so are you serious about moving before you go any further?

An ‘agreement in principle’ (AIP), ‘decision in principle’ or ‘mortgage in principle’ are all terms that refer to much of the same thing. A lender will take some basic information and perform a credit search and gain a credit score before coming up with a figure that ‘in principle’ it would be able to lend. You should be able to get a mortgage agreement in principle for free, and some can be issued within a few minutes.

Having a mortgage agreement in principle can help speed up the home-buying process, as you know how much you’re likely to be able to borrow. Having evidence of this also makes you a more appealing buyer, and will give a seller and their estate agent confidence that you’re serious about the purchase.

A decision in principle is also useful for borrowers that are worried about meeting a lender’s eligibility criteria, because going through the initial checks early will give a sense of whether you’re likely to be accepted or not. If you’re rejected, it gives you the chance to reassess your financial situation before you start house hunting.

It’s not compulsory to get an agreement in principle before you start looking for a house to buy. Another option is to discuss headline figures with a mortgage broker and get their advice. If the purchase – and your finances – look relatively straightforward, you could decide to wait until your offer is accepted and move quickly to make a full mortgage application instead.

Once your offer has been accepted and you are ready to arrange your mortgage, you need to go through the entire mortgage application process and get your mortgage offer.