Agreements in Principle and credit ratings

clarelutwyche

I'm a first time buyer and am currently looking at mortgages - how much I can borrow etc. I'm a bit concerned about these agreements in principle that have to be carried out before some lenders will tell you exactly how much they'll lend you. Apparently too many credit checks in a short space of time can adversely affect your credit rating but how many is too many? I've been to a broker who carried out one for me (with my permission) but I'm also keen to talk to a couple of building societies who are offering good deals at the moment. What I really don't want to do though is agree to too many agreements in principle and end up shooting myself in the foot - any comments/advice would be very welcome.

Thanks

herbiesjp

A good adviser will be able to tell you whether a deal offered by a lender will be available to you based on your income details.

The credit search, in reality, is only there to make sure you do not have a bad credit history i.e. CCJs, bankrupt, defaults, missed payments etc.

You would only go for an agreement in principle, once you had founf THE scheme you want to go for

Fairdo_2

Quite a new development, with the fact that many lenders now use affordability to assess credit amounts, is the introduction of a "Quotation Search" instead of the traditional "Credit Score". This is sufficient for lenders to be able to do an Agreement In Principle (AIP) for you, without leaving a credit "footprint".

However, at this moment in time, the only high street lenders I know to be using this system are Birmingham Midshires and most recently The Halifax.

More are gearing up to use it, but to my knowledge are not yet using it.

The only danger I see is that the AIP would have to be completed accurately at AIP stage, or a full application with slightly different details (even spelling errors) could trigger off a full credit score at Application stage that highlights other information that fails it later on. It is unlikely, but could happen.

However, as HerbieSJP said, it should be sufficient in many cases to get verbal Agreement In Principle until you are sure you wish to go ahead. If someone is concerned that they may be borderline in their credit rating, it could be worth trying their hand with this "Quotation Search".

payless

IMHO - Unless you need to go above the norms on income multiplers, its not really worth bothering with AIPs, until you have decided on property / mortgage deal.
( or perhaps just do one to prove to yourself / agents / vendors, that you are good for the money/ no unknown credit problems - there's no need to stick with that lender at the end anyway )