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Agreement in Principle and Soft Credit Searches

What is an Agreement in Principle? | MoneymanTV

Throughout your mortgage process, you’ll undergo affordability checks, credit searches, and income verification with your mortgage lender. Successfully navigating these steps will lead to obtaining an agreement in principle (AIP), an important document.

Not only does an AIP indicate the lender’s willingness, in principle, to grant you the funds, but it also enhances your negotiating position when discussing property prices. Sellers recognise your seriousness as a buyer, ready to proceed with the transaction.

How does your agreement in principle affect your credit score?

The impact of an agreement in principle on your credit score depends on the type of credit search conducted by the mortgage lender – hard searches and soft searches being the main types.

Soft Credit Searches

Presently, mortgage lenders tend to opt for soft credit searches more frequently than hard searches. Soft searches, while less detailed, still provide a good indication of potential acceptance. Importantly, they usually do not leave a credit footprint, meaning your credit score remains unaffected.

Hard Credit Searches

In contrast, hard credit searches are more comprehensive and can affect your credit score by leaving a footprint visible to anyone examining your credit file. While individuals with a good credit score may be less affected, those with a lower score could encounter challenges.

Multiple hard searches, especially with a poor credit score, may deter mortgage lenders as it might suggest an attempt to secure multiple credits simultaneously.

Does an agreement in principle guarantee a mortgage in Hull?

Although obtaining a mortgage is not guaranteed, having an agreement in principle is advantageous. When you submit all required documents, an underwriter reviews them to make a final decision.

The details within agreements in principle often include critical information that home buyers, especially first time buyers in Hull, might overlook. Seeking mortgage advice from an open and honest mortgage broker in Hull can be valuable, ensuring you fully understand the terms.

How long will my agreement in principle last for?

Typically, agreements in principle may need renewal after 30-90 days. As an experienced mortgage broker in Hull, we recommend obtaining one early to avoid potential setbacks.

Renewing your AIP promptly is important, as it ensures you’re prepared and won’t miss out on a dream property, potentially losing it to another buyer with a valid AIP. Remember, the process is straightforward, and obtaining another AIP if needed is simple.

Whether you’re a first time buyer or considering moving home in Hull, our dedicated mortgage advice in Hull services offer a free initial appointment with expert mortgage advisors. Book online to explore how we can help you in your mortgage journey.

Date Last Edited: 01/09/2024

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