Agreement in Principal - What does it mean ?

Austinhead

We have been working with a financial advisor to find a mortgage. He recommended one, we were happy and filled out the application form, provided proof of income e.t.c. He has got back to me today saying that the mortgage has been approved in principal, but what does this really mean ??. When do we actually get a definite "yes" ??.

We are being asked by our solicitor for some money towards searches but are a bit reluctant to fork out until we know for sure we will get our mortgage.

Any advice on what the AIP really means and what to do now would be great.

Thanks.

dunstonh

Basically, its based on what you have said so far. As long as valuation and information on application stack up, if proof requested, then they are happy to lend.

If you have an adviser, why arent you asking him this? It's what he is paid for.

Austinhead

Thanks for your reply, but this is my point, if it is based on everything we have said, then surely it's 99.9% definite, however if they have yet to scrutinise the information e.t.c. then it becomes less definite because sometimes questions can occur. I suppose i wanted to understand into how much detail they go prior to giving the AIP.

I have questioned it through my advisor, who said that it would be best to wait until the lender had got to the stage where they were instructing valuations prior to sending any money to the solicitor for local searches e.t.c.

Thanks.

MortgageMamma

I always advise my clients to hold on for the actual mortgage offer before they pay for searches but if they are in a rush to complete then on receipt of a satisfactory valuation is acceptable

Good luck

MM

LisaT186

I would suspect that he has submitted the information on line and a credit search has been done. Based on info declared and searches carried out so far all looks fine. The paperwork (signed application form, proof of earnings, proof of address etc) will be sent by post for the lender to check and as long as that all proves what they have been told then they will be able to give you a definite yes. Then you wait for the valuation and if that is ok then you get your mortgage offer.

Just ask your broker when the supporting paperwork was sent and when he expects it to be fully underwritten (accepted subject to valuation).

Good Luck

dunstonh

I have questioned it through my advisor, who said that it would be best to wait until the lender had got to the stage where they were instructing valuations prior to sending any money to the solicitor for local searches e.t.c.

Sound advice.

Austinhead

Thanks for the advice/confirmation, i am now clear that i will wait until i send any money for searches.

*fingers crossed*