Agreement In Principle
Thinking of buying a property, lets get you mortgage ready with agreement in principal. Having your mortgage pre prepared will show sellers and agents that you have done some homework.
Understanding Mortgage in Principle (AIP/DIP)
Before entering into any property negotiations, it is essential to get confirmation from a mortgage lender that they will lend you the necessary funds. This confirmation is commonly referred to as a Mortgage in Principle (MIP), Agreement in Principle (AIP), or Decision in Principle (DIP). This confirmation allows you to confidently assess your budget and avoid the disappointment of pursuing a property you can’t afford.
Why Obtain a Decision in Principle?
Conducting thorough research and obtaining a Decision in Principle (DIP) before embarking on your journey to homeownership is strongly recommended. This proactive measure enables you to focus on properties within your financial range and positions you as a serious buyer in the eyes of vendors and their agents, contributing to a smoother negotiation.
How to Secure a Decision in Principle
1. Initial Consultation: Engage with our mortgage adviser, who will meticulously review your financial situation, including your income, expenses, credit history, and available deposits.
2. Leverage Professional Expertise: Our impartial mortgage adviser has the expertise to analyse numerous mortgage options and locate the best deals tailored to your unique circumstances. Unlike banks or building societies, we provide access to various options from many different lenders, ensuring you secure the most suitable mortgage product.
3. Choose the Right Mortgage: Our adviser will refine your options. This includes considerations such as how they handle shift allowances, overtime, bonuses, and the speed of processing mortgage offers.
You will also receive details about different types of mortgages, such as Fixed Rates and Tracker Rates, as well as your term options.
What if Your DIP is Declined?
There’s no need to panic if a DIP is declined. Multiple factors could contribute to this outcome, but it does not signify ineligibility for a mortgage with another lender. Common reasons for a declined DIP include issues with credit records, high debt levels, and lender-specific underwriting criteria. We always address any concerns during discussions, ensuring we approach lenders who align with your circumstances. We also recommend that you obtain a personal copy of your credit report. You can do this by clicking here. This is only a soft search and will NOT affect your credit file or score.
Is a Decision in Principle a Mortgage Guarantee?
A Decision, in Principle, is not a mortgage guarantee. Your final offer could be affected by factors such as changes in your circumstances, credit rating, property type, or available deposit. The lender will provide a tentative indication and usually communicate the necessary documents for the application process.
Validity of decision
Most DIPs remain valid for 60 to 90 days, after which you must resubmit your application. During this period, lenders typically perform a “soft search,” which does not impact your credit score.
When you are ready, don’t hesitate to give us a call or send a message. We are here to assist you every step of the way.
Your home (or property) may be repossessed if you do not keep up with repayments on your mortgage or any other debt secured on it.
