How To Get A Mortgage Decision In Principle
The first step in obtaining a mortgage is to arrange an agreement in principle with a mortgage lender, but how do you go about getting one?
The mortgage industry is notorious for jargon and it is not uncommon to have a few names for the same thing. This initial stage in the process of applying for a mortgage can be known as; Decision In Principle (DIP), Agreement In Principle (AIP) or a Mortgage Promise… they are all the exact same thing.
When buying a new home or raising funds on an existing home a decision in principle is the best place to start. At this stage a mortgage adviser will input a limited amount of information about you, your income and your credit details as well as some key information about the possible mortgage you wish to apply for into a lenders online system.
The lender will then run a credit search. In most cases this credit search will be what is known as a ‘soft search’ which means only you and the lender who conducted the search can see it ever happen, this is so it will not have a negative impact on your credit score. They also check over your details to make sure you fit certain areas of their criteria such as affordability and then produce a result. The decision in principle will either return as a pass, decline, conditional pass or a refer. If you receive a conditional pass the lender may have cleared you on credit score but may need additional information or offer you a different loan amount. If you receive a refer the lender will pass the application over to a human underwriter to check over to then give a pass or decline decision.
Mortgage Promises are not legally binding and you are free to move to a different lender if you do not get the result you wished for or if your circumstances change.
Many Estate Agents will require you to have a decision in principle in place before being able to put forward an offer to buy a property. Remember, it is a legal requirement for an Estate Agent to forward all offers to sellers, but without a decision in principle you would not be considered as being in a good position to buy and the seller may not wish to accept your offer until they know you have a mortgage agreement in place. Also remember you are not required to sit in front of the agents in house mortgage adviser before an offer will be passed over, this is actually illegal to suggest otherwise and is very poor practice which is common among large estate agency chains and has been documented on BBC’s Panorama.
But down to the question in hand, “how do I get an agreement in principle?” its simple… the best place to get a decision in principle is through an independent whole of market mortgage adviser. With their expert knowledge they will know the best lender for your situation and will be able to organise the whole thing for you. Some banks are taking up to 3 weeks to book in mortgage appointments and that appointment can take up to 3 hours. A specialist broker can deal with your enquiry in more detail much quicker and usually within a matter of days not weeks.
At Fordyce & Playle we help our clients obtain decision in principles within 48 hours (in most cases same day) so you can get on with the more exciting part of buying a home or renovating your existing one. And best of all there is no charge to obtain a mortgage promise so our service to you is free!
For more information please call 01342 826 741, email email@example.com or complete our online enquiry form and a fully qualified and regulated Mortgage Adviser will be in touch to discuss everything in more detail.
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of Fordyce & Playle Limited. All comments are made in good faith, and neither Fordyce & Playle Limited nor the author will accept liability for them. No advice is given in any posting. Please contact your Financial Adviser for more information or advice.