AIP now or once property is found???

westy_1981

Hi all,

We are FTBs and are beginning to search for a property to buy. My question is -

Should we

a) get an official AIP from a lender now ie before we have found 'the' property in order to put us ahead of the curve?

or b) wait until we have found the property we want, have put an offer in, and then get the AIP from the lender once our offer has been confirmed as accepted?

Are there any major positives / negatives caused by either method?

I have spoken to a couple of brokers and we know that there shouldn't be a problem borrowing enough for the property types we like in the areas we like.

Very new to this so excuse any daft aspects of this question . . .

Thanks in advance for any help.

BabyBoots

The positive of having an agreement in principle is that it shows vendors you are serious about buying and able to do so. Have a look at the best rates available including the various fees (e.g. money supermarket is very straightforward to use and you don't have to enter any of your details to see the best rates).

However, the rates are likely to change between you getting the AIP and a formal mortgage offer, if you spend a while house hunting. If neither your circumstances nor general economic trends change significantly in this period, you are still likely to be offered teh same totals funds to borrow.

The difference with the formal mortgage offer is that it has a fixed validity. You usually paid an up front fee to secure the offer of funds -e.g £300 to £1000 is common for a fixed rate deal, and this is dependent on you taking up the mortgage by a specified date - e.g. six months away. If you enter into this too soon and get held up in a chain, you lose the deal you arranged and the fee for arranging it.

You can get several AIPs from different providers - it's basically a quote of what they will offer you, ususally following a 1/2 hour to hour chat where you bring any payslips, bank statements, references etc that they ask you to.

jozbo

Isn't t inadvisable to get several AIP's though? Since every one involves a footprint being left on your credit file?
I would tell the EAs I have an AIP at point of looking for properties (they are unlikely to ask for proof at that stage) then apply once you're starting to make offers on something. That way you minimise risk of multiple credit footprints and get a deal specifically suited to the property (ie in some cases you may want to hold back some of the deposit to do work to a property, if that's an option).

sonastin

I would get one AIP now for the most you would be wanting to borrow, and then leave it at that until you have found somewhere. Even if the AIP expires (mine was valid for 3 months) it shows an EA that someone was willing to consider offering you enough, which is really what they want to know when they ask for proof of finance. Lenders won't worry too much about an AIP application appearing on your credit file because it is to be expected. Lots of fingerprints from lots of AIP applications will make them suspicious and affect your chances of getting a mortgage though.

Just to clarify option b though, there is no need to get an AIP once you've had an offer accepted - at this stage you can go straight to the full-on mortgage application specific to the property you are buying.