An Agreement in Principle (also known as an AIP or Decision in Principle) is where you pass a Lender credit score to qualify for a mortgage.
By obtaining an Agreement in Principle, you prove that you are ready to support any offers you make as a First-Time Buyer in London. It may also aid in negotiating a lower price if you have one of these as it shows the seller you are serious and have the means to continue with the process.
The more frequently seen methods of credit scoring are via soft searches, rather than a hard search. These may still affect your credit score, though usually a hard search will be more likely to do this than a soft search.
The reason for this, is that a hard credit search leaves a credit footprint, whereas a soft search does not. Regardless, you can rest assured that whichever is used by the lender, is done with the best intentions.
Having your credit checked via a hard search every so often should not make too much difference. It becomes an issue if you take too many of these within a small amount of time.
On the flip side, if you know you have a good credit score and it’s the best path to take with a lender, this should not be a problem.
Whilst the prospect of this would be nice, there are no guarantees that having an Agreement in Principle will allow you to get a mortgage. The Lender will still require seeing all your documents and only then will an Underwriter make very final decision.
Often we find that customers contact us after they have been declined at application stage, due to missing some small print in their Agreement in Principle. You will need to provide ID to prove that your identity, payslips to prove your income and bank statements to prove you are smart with money, before a lender will offer your case.
Though you are able to make an offer without an Agreement in Principle, we would not suggest doing so. Any credible Estate Agent will want you to prove you can definitely go forward.
It is possible to obtain an Agreement in Principle within 24 hours of getting in touch with an experienced mortgage advisor in London.
Typically,an Agreement in Principle will expire after 30-90 days. The good news is that this doesn’t mean you should just apply for the first house you find. If your Agreement in Principle expires, it’s not a difficult task obtaining another ahead of making an offer.
Finding a mortgage only to be declined a mortgage can cause understandable disappointment. With this in mind, we recommend getting an Agreement in Principle as early as possible.