The right time to get an AiP?

KirstyO

Hi Everyone,


I'm on the brink of looking into mortgage possibilities.


Due to a rocky credit record I know it's not going to be straightforward for me, and it may be that I don't go down the route just yet.


But I was wondering at what point is it useful to get an agreement in principle? Is this something you can do to test the water (or does it show up on your file for a long time and look dodgy if you get one and don't go through with it)?


Or is it something to do when you've found a property and are ready to apply immediately if the result is positive?


I have a deposit saved up for a small home (it's only for me!) and there's a couple in the areas I like that I'm hoping to view. I think my ultimate question is what is the order for doing these things in? Or is it chicken and egg?

kingstreet

Speak to an independent broker with copies of all three of your credit files in your hand. The broker will work out what you can do and with whom.

An agreement in principle might be considered now, or later depending on your likely purchase timescales.

You should be doing the mortgage legwork now if you are planning on viewings in the near future.

Malmo

An AIP / DIP is the first step when you start your search and before you make an offer. Having an AIP / DIP tends to demonstrate to vendors and their agents that you are a serious buyer, who has been through a preliminary credit search by a lender who may lend to you, subject to further checks and criteria.

However, different lenders perform different types of credit search (either a soft or hard search). Many people question the value and usefulness of a AIP / DIP based on a soft search, as it may miss something that a hard search picks up. Halifax is one example of a lender that performs a soft search.

Due to a rocky credit record I know it's not going to be straightforward for me

What specifically are your credit issues? Depending on your circumstances, you may need the help of a good whole of market mortgage broker.

KirstyO

I am going to chat to a broker. I have a default which is just over 3 years old and was in a debt management plan until 2nd Jan this year. I'm thinking my options will be fairly limited, but I'm approaching a point where the girl I house share with is moving out over Summer and I don't want to waste money starting a new tenancy agreement if I'm able to get a mortgage now.


My fear is that the options that will be open to me will require a much larger deposit than I currently have, or will have very high rates.
I will rent again with a new house mate if I have to for another 12-18 months, but then I have fixed-term bank accounts coming to an end (Oct2016) so it would be good to know that even if I can't pursue a mortgage now, the likelihood of being able to do so by Autumn next year.