Is a mortgage in principle worth the paper it's written on?

papermoney

I was talking at work to someone who is a FTB and I was explaining that I was (hopefully) buying a property and that I go a mortgage in principle first then filled out the application. They said they were told that it was a meaningless exercise because it's the application which means something and credit scores etc don't happen until the actual application.

Is there a point to them?

Thanks

hshen

Nope.

Had 2 AIPs, both ended up turning me down because I didn't have enough credit already.

Just like an over market value offer, not worth the paper it's written on. (unless you are cash buyer and don't need to listen to lender's surveyor)

Jenniefour

In the good old days of irresponsible lending and borrowing a mortgage in principle was a done deal for the mortgage - nowadays it is better to regard it as an indication that a lender might provide a mortage when they've gone through all your financial affairs with a fine toothcomb. Essentially meaningless and best not to count the chickens before they hatch. A reason to get a good knowledgeable broker on the case - although that doesn't always end in a mortgage either.

Thrugelmir

Jenniefour wrote: »

In the good old days of irresponsible lending and borrowing a mortgage in principle was a done deal for the mortgage - nowadays it is better to regard it as an indication that a lender might provide a mortage when they've gone through all your financial affairs with a fine toothcomb.

AIP's are still meaningful is received from a smaller lender such as one of the regional building societies.

firstaspect

They general mean that if everything you have told them is correct, and you have a very good credit rating, then you are very likely to get a mortgage offer. Anything you've said which you can't prove or any blips on your credit record and it might not go to offer.

benjo

Yes I think they are worth the paper they are written on, but paper is cheap.

However, getting declined for an AIP is worth more than the paper it is written on, since you know that there is no chance of a mortgage with that lender before they leave a trace on your credit file and thus reduce your chances of a mortgage with another lender.

opinions4u

Are they worthwhile? Yes. They provide you (and the lender) with a reasonable indiciation as to whether business can be done.

Are they worth the paper they are written on? Absolutely not. One minor change / new piece of information buys the lender a get out clause.

Littlemadam83

Sorry to jump on this as well, but I have been meaning to ask this question, and it relates to the AIP question.

We have been given an AIP, they have apparently "soft" credit checked us. Now, we are proceeding and everything, but are we going to have to pay the upfront surveyors fee, if like everyone has said we dont meet their criteria? Also, should we outlay for the solicitor in the hope the lender doesn't change their mind?

Thank you xxxx

opinions4u

Most lenders will do the "hard" credit checks before spending your valuation fee.

If there's no hurry, I'd wait for the mortgage offer before telling the solicitor to start work (but have the solicitor on standby!).

Littlemadam83

Hi opinions4u, thanks for the info. There is no real great rush, so we will definitely hang on then and wait for it all to go through.

Thanks also for the advice on the hard credit checking first, really has put my mind at rest.

xxx

AndersLimpar_2

I had an AIP with Yorkshire BS and asked when they said 'yes thats fine, all gone through ok' if they could pull it, was told they would pull it only if the valuation is miles out....

3 weeks after the AIP its all going through, completion date of the 3rd Dec. No problems with the final mortgage offer at all.