First and foremost, what is an Agreement in Principle? You may see this online shortened to AIP or under the name Decision in Principle (worry not, it’s exactly the same thing), an Agreement in Principle is a certification of passing a lenders credit score, allowing you to qualify for a potential mortgage.
Once you have obtained yourself an Agreement in Principle, you are ready to support any offers you make as a First-Time Buyer in Essex. Having one of these on hand may put you in a better place to negotiate a lower price, as it is a demonstration to the seller that you are making a serious enquiry and have the financial means to proceed.
More commonly these days we see lenders using soft searches as their primary method of credit scoring, however hard searches still do occur and it’s not impossible for either to affect your credit score. Generally it’s a hard search rather than a soft search that will do this, though it’s not unheard of completely. Remember with soft searches, whilst they don’t go as in-depth, they’re still valid forms of credit scoring.
If you infrequently have a hard search performed on you, then for the most part you should remain unaffected. Where this becomes an issue, is if you continuously have these done in a short space of time, as hard searches leave a credit footprint.
On the other side of the coin, if have a good credit rating and you know this, you should not be put off by a hard search, especially if it’s your best chance of obtaining a mortgage.
Whilst in theory this would be really nice, there are unfortunately no guarantees in the world of properties and mortgages, even if having an Agreement in Principle does make you look really good. At the end of the day, the mortgage lender will still need to see all your documents and only then will a decision be made by an underwriter.
We regularly encounter customers who have gotten to the point of a mortgage application and been declined, even with their AIP. This is usually down to some missed or misexplained small print in the Agreement in Principle itself.
You will be required to provide ID to prove that you are genuine, payslips to prove the amount you claim to earn is in fact true and bank statements to prove you conduct your finances. Once all this has been submitted, then a lender will offer your case.
Though you are able to make an offer without an Agreement in Principle, it is not something we would recommend. An Estate Agent with credibility will want you to prove you can proceed as expected.
It is possible to obtain an Agreement in Principle within 24 hours of speaking with a trusted Mortgage Advisor in Essex.
Typically speaking, an Agreement in Principle will expire after 30-90 days. The good news for you, is this does not mean you should just apply for the first house you see. If your Agreement in Principle expires, you can quite easily have it refreshed for when you are ready to make an offer on a property.
Getting declined on a mortgage can understandably be disappointing. As such, we recommend getting an Agreement in Principle as early on into the process as you can.