When you pass the lenders credit score to qualify for a mortgage, you will receive an agreement in principle or an AIP for short. By having an AIP in place allows you to make an offer on a property. It’s also quite handy for asking price negotiations, as the seller now know that you are serious and ready to start.
This independently relies on the type of search the lender decides to take. These include both soft and hard credit searches:
It is more common for lenders to carry out soft credit searches these days. This is because they need less information out of it and can leave your credit score unaffected. 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 an extremely strong signal that your full application will be accepted.
Hard credit searches go more in-depth than soft searches. The main difference between Hard and soft searches is that hard searches can affect your credit score. Anyone who looks at your file in the future will be able to see that you have had a hard search on your score. This won’t really affect you if your credit score is high. If your score is lower and you have more than one hard search on your file, it could look like you are trying to apply for lots of credit at the same time.
You will never be guaranteed a mortgage, but an AIP will help. Once you provide the lender with all your documents, an Underwriter will make a final decision. Agreements in principle usually include small print that can easily be missed. When customers reach out for help about their agreement in principle, in some cases we find they’ve been turned away at full mortgage application stage.
The documents required include ID, payslips, bank statements, etc. As your expert Mortgage Broker in Hull, we take pride in helping you get all of this ready.
If you are lucky, you can get away with it, however, most estate agents will want you to provide evidence that you are able to proceed with the purchase.
Normally, your AIP needs renewing after around 30-90 days. As an experienced Mortgage Broker in Hull, we still recommend getting one early so that you can avoid finding your dream home only to be told a Mortgage isn’t available for you. You don’t always need to buy the first house you see after you get your AIP. It’s a simple process, so don’t worry if it expires, you can get another one quite easily.
You may be a First Time Buyer or you might be thinking of Moving Home and are seeking Mortgage Advice in Hull. If so, we think that you may benefit from our 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!