You don`t need to get an agreement in principle, but it can sometimes help if you`re very handsome (see “How an AIP Can Help,” below). A mortgage is not in principle a formal mortgage offer, nor is it a guarantee that the lender will give you a mortgage in the future. Make sure you get advice on products and lenders before pursuing an agreement in principle, as you can leave a soft or hard footprint in your credit file. If you have a mortgage in principle, you can show sellers that it is likely that you can afford the property you want to buy. This could help if you choose between more than one buyer. If you are worried about bad credit, a mortgage could in principle give you an idea if a lender thinks you can afford to pay off your home loan. A mortgage can normally last between 60 and 90 days, depending on the lender. If you have not found a property or accepted an offer during this period, you may need to receive another one. Renewal should be easy, unless your circumstances (or economy) have changed significantly. An agreement in principle, also known as a “decision in principle,” “mortgage promise” or “mortgage in principle,” is a certificate or statement from a lender indicating that it would lend you a certain amount “in principle.” You may be rejected if you apply for a mortgage in principle, which can affect your creditworthiness. If you remortgaging, there is less need for this information, so you would file an agreement in principle once you have chosen a lender and a product. Even if your mortgage is accepted in principle, your full mortgage application could be rejected at a later date.
For example, if the lender only performed a gentle credit check, it may not have seen it all in your credit file. Other information may be revealed when searching for a full mortgage application. A mortgage in principle can also save time in the purchase process, both in terms of accepting your offer and speeding up the mortgage application process. Even if it is not a full mortgage application, you must still provide information to obtain an agreement in principle. It is important to remember that, in principle, an agreement is not a mortgage offer or official confirmation that you have a mortgage. To do this, you must go through the full application process.