We have written about Mortgage Agreements in Principle (AIPs) before. In simple terms, an AIP allows a borrower to better determine how much they are able to borrow based on their current circumstances. This is, of course, very useful as it allows buyers to set realistic limits for their search for a new home. It also means that once you have found a place your offer will have greater impact because the seller knows that you have access to the money you need (in principle).
It’s important to note that a Mortgage Agreement in Principal is a fluid thing. It is based upon the information you provided and so, if the information provided is inaccurate or your circumstances change, this is likely to affect your mortgage offer. For this reason, we like to take some time getting all this information together before we apply for an AIP. Also, once an AIP has been requested you shouldn’t change job, take out a new credit card or miss a loan payment. These sort of things may well affect your AIP and mean you don’t get offered a loan formally when you need it.
A Mortgage Agreement in Principal usually last between 60 days and 90 days so it’s important that you don’t apply too soon - or too late. Too soon, because the AIP might expire and too late because unless you have it at the time you make your offer the negotiation-value of already having an AIPs lost.
It’s also important not to keep requesting Mortgage Agreements in Principals. This is because every time you apply a note is made on your credit record. If the AIP is defined by the mortgage lender as an Enquiry then it is likely to leave what is called a ‘soft footprint’ on your credit file - which isn’t a problem. However, if the application for an AIP is classified as a Loan Application it will probably leave a ‘hard footprint’ and too many of these will have a detrimental effect on your credit history!
We are happy to advise you on the sort of information you are likely to have to get together for a Loan application if you are looking to make an Application in Principle - and the good news is that once made, all you will need to do later is confirm the information is correct by providing detailed information to support the data you previously supplied.
To speak to a mortgage adviser, contact us on 01628 507477 for a chat with no obligation.
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