When we surveyed more than 3,000 homeowners in July 2019, 53% said they had an agreement in principle before applying for their mortgage. About 25% said they didn`t know or didn`t remember having one, and only 25% said they didn`t. 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. Make sure you get advice on products and lenders before pursuing an agreement in principle, as you can leave a soft or hard footprint in your credit file. However, it is important to note that it is in principle offered. If you make a formal application for the mortgage itself, the lender has the right to change the details of the agreement or it may decide not to grant you the loan (for example. B if your financial situation has changed). If you leave for a long period between getting a mortgage in principle and applying for a mortgage, you may find that interest rates have changed or that you may find a better offer elsewhere. The size of your contract can in principle be a useful indicator of how much you can borrow. You can use it to search for real estate in your price range. If you have had credit problems in the past or have a limited credit history and are not sure what a bank or construction credit union might lend you, an agreement in principle could give you extra security from your credit perspective.
If you remortgaging, there is less need for this information, so you would file an agreement in principle once you have chosen a lender and a product. You will then receive a mortgage based on what the lender thinks you can afford to pay. It could be more or less than you expected. Even if you have obtained an IPA, you may not receive a formal mortgage offer. This can be for a number of reasons, such as.B. if you have recently been declared bankrupt, if your financial history is incomplete, or you have only been busy for a few months. It is important to remember that, in principle, an agreement is not a mortgage offer or official confirmation that you have a mortgage. To do this, you must go through the full application process.
An AIP is not the same as a formal mortgage offer, so you should always apply for a mortgage once you have accepted an offer for a property. Lenders will probably conduct credit checks if you are applying for a mortgage in principle.