Mortgage agreement in principle

jimbo83

Hi all

Just a quick question with regards to an AIP.

I received an AIP last week before bidding on a property. I have had an offer accepted on the property and I'm now going to see the broker to tie things up tomorrow and provide my proof of deposit and payslips etc.

Is it just a matter of dotting the i's and crossing the t's now? Has the lender done all their credit searches etc and all they want to do is make sure i exist, the property exists and that I earn what I say i earn?

Thanks all

harvey115

An AIP is just a machine generated number and usually shows a quick maximum number the lender may consider lending.

The real stuff start when applying through a full application process.

From your post it sounds like you are buying an auction property? if so timing is one of the most important factor in getting a mortgage. Make sure you mention the deadlines to your broker.

jimbo83

harvey115 wrote: »

An AIP is just a machine generated number and usually shows a quick maximum number the lender may consider lending.

The real stuff start when applying through a full application process.

From your post it sounds like you are buying an auction property? if so timing is one of the most important factor in getting a mortgage. Make sure you mention the deadlines to your broker.

No its a house purchase in the "normal" manner.

I got an agreement in principle based upon the price which the property was on the market for (as i knew that would be the max i'd pay). In the end i got it for less. I wanted to know that I could get a mortgage before bidding.

I understood from my broker that they've already done their credit searches so was just looking for some comfort that we'll just be sorting out the proof of income etc tomorrow at our meeting.

Thanks

harvey115

Usually the lender does a soft footprint search on your credit reports for an AIP. Once you advance through the full application process, you credit files are searched properly.

However if you have nothing to worry about in your credit report, everything should be fine.

jimbo83

I have a credit rating score with experian of 970 out of a possible 999 which is classed as excellent.

So hopefully i dont have anything to worry about?

tarkuk

i reciently got a mortgage through Barclays/Woolwich and before the mortgage process i had a credit score of 950+ but they did 3 credit searches and now my score is like 808, well annoying

jimbo83

tarkuk wrote: »

i reciently got a mortgage through Barclays/Woolwich and before the mortgage process i had a credit score of 950+ but they did 3 credit searches and now my score is like 808, well annoying

I hate how these searches can have a bearing on your rating.

I looked at my file tonight online and ive had about 5/6 insurance searches in June. I have not changed my insurer for 3 years - perhaps they were a result of looking on comparison websites for new quotes!

Lilla

Unfortunately harvey115 is incorrect, a credit search done for AIP purposes is a proper footprint in most cases. There are a small number of lenders, whose search leaves a so-called soft footprint, but that's not the norm. Your credit history is searched and if there's anything not acceptable for the lender (e.g. you're not registered on the electoral roll, your credit history is not long enough, you had a late payment in the last 12 months and they only accept it outside 12 months...) then you may be declined despite your shining credit score with Experian.

Please also note that lenders have their long list of criteria, so your personal circumstances and the property particulars could still cause a decline decision after a successful AIP. AIP is there to prove you can get the money you're looking for and hopefully the broker selected the lender based on your circumstances and property requirements as well, not only potential lending amount and low rates.

When you sign the paperwork, it will secure the chosen mortgage deal for you and start the process of valuation and your paperwork and circumstances being checked by the lender. If the broker did a proper prep job, then from your point of view you'll be just dotting the i-s and cross the t-s, everything else is down to the broker and the lender to manage.

Lilla

Yes, comparison website insurance quotes result in searches...the more quotes you obtain the more searches there will be. The good news is that lenders primarily look for searches in relation to borrowing, not home/car insurance.

jimbo83

Lilla wrote: »

Unfortunately harvey115 is incorrect, a credit search done for AIP purposes is a proper footprint in most cases. There are a small number of lenders, whose search leaves a so-called soft footprint, but that's not the norm. Your credit history is searched and if there's anything not acceptable for the lender (e.g. you're not registered on the electoral roll, your credit history is not long enough, you had a late payment in the last 12 months and they only accept it outside 12 months...) then you may be declined despite your shining credit score with Experian.

Please also note that lenders have their long list of criteria, so your personal circumstances and the property particulars could still cause a decline decision after a successful AIP. AIP is there to prove you can get the money you're looking for and hopefully the broker selected the lender based on your circumstances and property requirements as well, not only potential lending amount and low rates.

When you sign the paperwork, it will secure the chosen mortgage deal for you and start the process of valuation and your paperwork and circumstances being checked by the lender. If the broker did a proper prep job, then from your point of view you'll be just dotting the i-s and cross the t-s, everything else is down to the broker and the lender to manage.

What does it mean for the AIP if a soft search has been done?

What does the soft search search compared to a full search exactly?

Lilla

Normally the difference is visibility - e.g. if the AIP is done by Halifax, the search will be visible to you on your credit file, but to anyone else only on the day when it was done, not from the next day onwards. This means that if you apply for a mortgage with another lender, they won't see that you had a credit search by Halifax for AIP purposes. The reason why it's important is because 3 mortgage credit searches within the last 6 months can already cause the application to be declined.