When you pass the lenders credit score to qualify for a mortgage, you will obtain an agreement in principle – commonly known as an AIP for short. Having an agreement in principle in place allows you to make an offer on a property. It also can be very useful when negotiating on the asking price, as the seller now knows that you are serious and ready to start.
This depends on the type of credit search the lender decides to undertake. They will either perform a soft credit search or a hard credit search on your file:
Nowadays, it’s more common for a lender to carry out a soft credit search over a hard credit search. They usually choose to perform a soft credit search because they require less information out of it and there is a lot less chance of your credit score being affected by this one.
Whilst the financial institution doing a soft search obtains less information about you than if they had done a hard search, an agreement in principle from one of these lenders is usually still a very strong indication that your application could be accepted.
Hard credit searches go a lot more in-depth than soft searches. The main difference between hard and soft searches is that hard credit searches can affect your credit score, by leaving a footprint. Anyone who looks at your file in the future will be able to see that lenders have hard searched your credit score.
This won’t really affect you if you have a good credit score. The problems can come if your score is lower and you have had more than one hard search on your file, as it could look like you are trying to apply for lots of credit at the same time. This is likely to put off a lender.
You will never be guaranteed a mortgage, but having an agreement in principle in place ahead of time will certainly work in your favour. Once you provide the lender with all your documents, an Underwriter will review everything and make a final decision. Agreements in principle usually include small print that can easily be missed, which is why speaking to a Mortgage Broker in Hull can be useful.
When customers reach out to us for help about their agreement in principle, we find that in some cases they’ve been turned away at full mortgage application stage.
The documents required include, but are not limited to, things like ID, payslips and bank statements. As your expert Mortgage Broker in Hull, we take pride in helping you be prepared for all this. If you are looking at starting your mortgage process, you may need to look at how to get prepared for a mortgage in Hull.
It’s necessary to have your agreement in principle in place when making an offer. Most credible estate agents will want you to provide evidence that you are able to proceed with the purchase.
Normally, your agreement in principle needs renewing after around 30-90 days. As an experienced Mortgage Broker in Hull, we still recommend getting one as early as you can, in order to avoid finding your dream home only to be told you aren’t eligible for a mortgage.
You don’t always need to buy the first house you see after you get your agreement in principle. It’s a simple process, so if it does happen to expire, you can just obtain another.
You may be a First Time Buyer in Hull or you might be thinking of Moving Home in Hull and are looking for great Mortgage Advice in Hull. If so, we think that you will benefit from our dedicated mortgage advice services in Hull.
We offer a free initial mortgage consultation with one of our expert Mortgage Advisors, so feel free to get in touch today and we will see how we can help!