Agreement in Principle & Soft Credit Searches

What is an Agreement in Principle?

AIP and Credit Search Mortgage Advice in Essex

Upon passing the lender’s credit assessment for a mortgage, you’ll receive what’s known as an Agreement in Principle, or AIP for short.

This document enables you to make an offer on a property and proves advantageous during price negotiations. By presenting an AIP, you demonstrate to the seller your seriousness and readiness to proceed with the purchase.

How does your AIP affect your Credit Score?

The type of credit search conducted by the lender determines the independence of this process. There are two main types: soft and hard credit searches.

Soft Credit Searches:

Soft credit searches are increasingly favoured by lenders due to their efficiency and minimal impact on your credit score. While they provide less detailed information compared to hard searches, obtaining an AIP through a soft search still signals strong potential for your full application’s approval.

Hard Credit Searches

Hard credit searches delve deeper into your credit history and can affect your credit score. Multiple hard searches within a short timeframe may raise concerns about credit-seeking behaviour. However, if your credit score is robust, the impact is typically minimal.

Does an AIP Guarantee a Mortgage in Essex?

While an AIP enhances your mortgage prospects, it doesn’t guarantee approval. The final decision rests with the underwriter, who evaluates your submitted documents.

It’s essential to carefully review the terms and conditions of the AIP, as overlooked details can lead to complications during the full mortgage application stage.

Is My AIP a Necessity When Making an Offer?

While it’s possible to proceed without an AIP, most estate agents prefer evidence of your financial readiness to proceed with the purchase.

How Long Will My AIP Last For?

AIPs typically require renewal every 30-90 days. Obtaining one early in your property search process is advisable to avoid disappointment if your dream home becomes unavailable due to financing issues.

Remember, you’re not obligated to purchase the first property you encounter after receiving an AIP, and obtaining a new one is a straightforward process.

Whether you’re a first time buyer in Essex or considering a home move in Essex and seeking mortgage advice in Essex, our expert services can benefit you. We offer a free initial mortgage appointment with our knowledgeable advisors, so don’t hesitate to reach out today!

Date Last Edited: February 12, 2024