When you’re looking for that first (or next) property, you will want to do everything you can to secure your dream home. The challenge can often come when your offer is pitched against others, and you will want to make sure you do everything you can to seal the deal.
In one of our previous articles, we explained how the mortgage application process works and this included outlining what a mortgage agreement in principle is. Just to recap:
A mortgage agreement in principle (AIP) is a document stating how much a lender would potentially loan you given an initial review of your circumstances. It also helps show that you are serious about making the purchase when viewing and will generally last for around 90 days.
An agreement in principle is a soft check that does not take long, and the lender will look at the following to provide you with a figure:
- The exact details of your income
- Details of your outgoings and any existing credit agreements
- Your addresses for the last 3 years
Going armed to your viewings with a copy of your AIP can help make your offer stand out over others who could potentially be in a more attractive position (such as a cash buyer, not having a chain etc…). Here’s four key ways your AIP can help you become a power buyer:
- It evidences that you are able to proceed with the transaction
Being a formal confirmation from a mortgage lender about the total you are able to borrow, your agreement in principle confirms to the buyer that you are able to proceed with the transaction and that you are less likely to encounter any issues when it comes to getting a mortgage.When considering multiple offers, a buyer will certainly want to know that there is little chance of the transaction falling through, so an agreement in principle goes a long way to confirm this. In addition, some estate agents will only accept an offer from a buyer with an agreement in principle.
- It shows that you are serious about making a purchase
Viewing a property and putting in an offer is one thing, however completing on the transaction is something altogether different.An agreement in principle demonstrates that you are serious about the purchase as you have started the ball rolling already and got your mortgage lined up. - It can help speed up the purchase
Having your AIP in place means that you don’t have to go and hunt down a mortgage lender to get things moving.Because of this, when your offer is accepted you simply move onto a full application, cutting valuable time off the transaction. - It helps guide your property search
The fourth point is that a mortgage agreement in principle can help guide your search by outlining the total you can borrow. This means that you know what properties to look at and what is within your price range.This point will certainly help make sure you don’t waste valuable time on viewing that dream property that ends up being out of your reach!
Overall, having your agreement in principle is an extremely important part of making that property purchase and if you have any questions about looking into what you could borrow, simply contact us and we will be more than happy to help.