An agreement in principle is an official approach of an individual mortgage lender to claim a certain amount of mortgage credit on the basis of a specific real estate price. If you have an agreement in principle and decide to make a full application with that lender, you must provide more detailed personal data. The lender is not required to lend you the full amount indicated in the AIP. You can complete the entire process online – it should in principle only take about 15 minutes to get a mortgage. Filling out online forms with some lenders can even make you an immediate offer. It may take longer if you do it over the phone or in the store. However, the search leaves a “soft” or “hard” fingerprint in your credit file. You have the option to ask what type when you ask the lender for your business. You don`t need to get an agreement in principle, but it can sometimes help if you`re very handsome (see “How an AIP Can Help,” below). Full credit checks leave a “fingerprint” in your credit file. Many footprints in your file can have a negative impact on your score, simply because it suggests an element of “desperation” to borrow money. As a result, many apps can count against you if you come to apply for a full mortgage. Even if your mortgage is accepted in principle, your full mortgage application could be rejected at a later date.
For example, if the lender only performed a gentle credit check, it may not have seen it all in your credit file. Other information may be revealed when searching for a full mortgage application. Once you have your agreement in principle, you can see real estate within your specific price range; that is, the amount you could possibly borrow, plus each deposit you may have saved. A decision in principle is not a guarantee. If you go through the full application process, the lender will take a closer look at your income and credit history. You can choose not to give yourself credits at this point. Once you have decided to start the house hunting seriously, you are in principle asking for a mortgage. Apart from its practical applications, it will help you focus on and engage in your task. Knowing what you can afford, even in theory, gives a huge boost to trust.
Realtors will often want to make sure that you will be able to get a mortgage on a property before making an offer, so it may be helpful to have an agreement until that date. A mortgage can normally last between 60 and 90 days, depending on the lender. If you have not found a property or accepted an offer during this period, you may need to receive another one. Renewal should be easy, unless your circumstances (or economy) have changed significantly. This means that if you have found the property you want to buy, have accepted the offer and want to start the process of buying the home, you must always apply for a full mortgage. If you applied for your AIP through a mortgage advisor, they should be able to use the information you provided them previously as part of the full application process, but they will want to check if they are still correct.