By Kylie-Ann Gatecliffe, KAG Finance
An Agreement in Principle (AIP), “decision in principle” or a “mortgage in principle” are all terms that refer to the same thing. A lender will take basic information from you, such as name, date of birth, address history, income and outgoing details – and from that information perform a credit check.
This allows lenders to produce a figure as to which they would be willing to lend based on your information provided. This then produces a certificate with most lenders, which can then be shown to estate agents to prove you are in a good position to proceed with a house purchase.
Most decision in principles can be done within minutes. Even more complex clients can obtain them usually within 24-hours.
Completing an AIP yourself…
The danger of completing a decision in principle yourself online is that you can choose the wrong lender. Understanding lenders criteria takes time and a lot of experience, which is why using an advisor like myself to guide you on which lender is not only the most suitable, but most competitively priced, is key.
I have had clients in the past try to quickly obtain an agreement in principle and fill in the application incorrectly, causing it to decline – which can ultimately damage your credit rating.
Having a decision in principle puts you in a great position as a buyer. It means when you are viewing properties, especially in a competitive market, it allows you to act fast. Most vendors won’t accept offers until a buyer has a decision in principle, so making sure you have this early means you are prepared.