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Contact Your Local Branch

BELFAST, CITY CENTRE: 028 9013 7392
BELFAST, EAST OFFICE: 028 9560 9410
BELFAST, ORMEAU ROAD: 028 9521 9349
BELFAST, LISBURN ROAD: 028 9521 9351
DROMORE: 028 9210 6060
LISBURN: 028 9279 4300
GLENGORMLEY: 028 9072 7636
ARMAGH: 028 3743 0770
LURGAN: 028 3898 4004
DUNGANNON: 028 8747 0270
COALISLAND: 075 6180 7334
COOKSTOWN: 028 8673 1055

What You Need to Know About Mortgage Agreements in Principle

by | Apr 3, 2024 | Uncategorized | 0 comments

Looking for a new home is exciting, but it comes with a lot of steps that can be a bit much to handle. From making sure your credit score is good, saving up a decent amount for a down payment, and making sure your finances are in good shape, there’s a lot to do. Here at The Mortgage Clinic on Ormeau Road in Belfast, we want to make things as easy for you as possible.

Getting a Mortgage Agreement in Principle (AiP) is one step that might not be on everyone’s list, but it’s super important. It’s basically a way to show sellers and estate agents that you’re serious about buying a home. Whether you’re looking here in The Mortgage Clinic on Ormeau Road in Belfast or somewhere else that you’ve fallen in love with, let’s explain what an AiP is and why it’s a big deal when you’re looking to buy a house.

Understanding a Mortgage Agreement in Principle

A Mortgage Agreement in Principle is like getting a heads-up from a lender that, based on what they know about you so far, they think you could borrow the money you need to buy a house. It’s not a final yes, but it’s a pretty good signal that you’re on the right track. This isn’t just about showing you can buy a house; it’s also about making sure you’re looking at houses that are in the right price range for you.

Here’s why it’s helpful: When you start looking for houses, especially in popular areas like Ormeau Road, Belfast, you’ll find a lot of other people doing the same. If you’ve got an AiP, it tells sellers and estate agents that you’re not just window shopping—you’ve got a lender who’s tentatively willing to back you up. This can make your offer stand out, especially if there are multiple people interested in the same home.

Getting this agreement also helps you set a realistic budget, so you’re not wasting time looking at homes that are outside your price range. Plus, it can speed things up once you find the right place, as you’ve already got the ball rolling with your lender.

Remember, an AiP doesn’t lock you into anything. It’s free to get one, and it doesn’t mean you have to stick with the lender who gives it to you when it comes time to actually get your mortgage. It’s more like getting a preliminary thumbs-up that you can afford a home, which can be a big confidence boost when you’re house hunting.

The Right Time to Get an AiP

Knowing when to get your Mortgage Agreement in Principle is like picking the perfect moment to dive into the housing market. You don’t need one in your hand the minute you start thinking about buying a house, but you’ll want it before you get serious about making offers.

Here’s a simple way to think about it: If you’re just starting to look online, dreaming about the kind of home you’d like, and figuring out what’s available in places like Ormeau Road, Belfast, you’re probably fine without an AiP. This early stage is all about understanding what you like and what you can afford.

However, once you’re ready to start booking viewings and potentially making offers, that’s when an AiP comes into play. Estate agents and sellers will often ask if you have one. It’s their way of checking that you’re a serious buyer. If you can say yes, it shows you’ve already passed a lender’s initial checks, which can make your offer more appealing compared to someone who hasn’t taken this step.

So, aim to have your AiP ready by the time you’re ready to step into homes and consider making offers. Not only does it strengthen your position as a buyer, but it also gives you a clear idea of your budget, helping you focus on homes that are a good financial fit. This can save you a lot of time and emotional energy by keeping your search realistic and targeted.

​​Discover the advantages of working with a knowledgeable team by visiting The Mortgage Clinic on Ormeau Road in Belfast, where your homeownership dreams become a priority.

How Long Your AiP Lasts and Its Impact on Your Credit Score

After you’ve got your Mortgage Agreement in Principle (AiP), you might wonder how long it’s good for and if it affects your credit score. Here’s the lowdown:

An AiP usually lasts for about 90 days, which is roughly three months. This timeframe can vary a bit depending on the lender. Some might give you a shorter period, like 30 days, but 90 days is a common benchmark. This window gives you a decent amount of time to house hunt without feeling rushed. If your AiP runs out before you find the perfect place, don’t worry—you can usually apply for another one.

Now, about your credit score. When you apply for an AiP, lenders will peek into your financial history to see if you’re a good bet for a mortgage. Some do what’s called a ‘soft check,’ which doesn’t show up on your credit record to other lenders. This kind is great because it doesn’t affect your score at all.

However, some lenders might do a ‘hard check,’ which does show up on your credit record. If you have too many hard checks in a short period, it can make other lenders cautious because it looks like you’re applying for a lot of credit at once. That’s why it’s smart to only apply for an AiP when you’re seriously starting to look for a home.

The key takeaway? An AiP is a handy tool in your house-hunting kit, giving you a clearer budget and making you a more attractive buyer. Just be mindful of how its application might affect your credit, especially if you’re at the stage where every point on your credit score counts.

Navigating AiPs with a Less-Than-Perfect Credit History

If your credit history isn’t exactly spotless, you might wonder whether getting a Mortgage Agreement in Principle (AiP) is even possible for you. The good news is, it is possible. However, your journey might look a bit different compared to someone with a flawless credit record.

Firstly, it’s important to understand that your credit history is a key factor lenders look at when deciding whether to give you an AiP. If you’ve had financial hiccups in the past, like missed payments or more significant issues such as bankruptcy, it doesn’t automatically disqualify you. But, it can limit your options and potentially make the borrowing costs higher due to perceived higher risks.

Here’s the silver lining: Time is a healer when it comes to credit issues. Problems on your credit report have less impact the older they get, especially if they’re over six years old. Plus, some lenders are more sympathetic to individuals who’ve had credit issues but have since improved their financial situation.

Getting an AiP with a shaky credit history might mean you’ll need to do a bit more homework. This includes looking for lenders who are known to be more flexible with their lending criteria or considering products specifically designed for people with credit issues. This is where a mortgage broker can really come in handy. They can guide you towards lenders more likely to accept your application, saving you time and potentially sparing your credit score from unnecessary hard inquiries.

For a hassle-free mortgage application process, turn to the experienced team at The Mortgage Clinic on Ormeau Road in Belfast.

An AiP’s Role in Your Home Buying Journey

Securing a Mortgage Agreement in Principle (AiP) isn’t just ticking a box in the home buying process; it plays a significant role in shaping your journey to homeownership. Here’s why an AiP is more than just a preliminary nod from a lender:

  • It’s a Confidence Booster; It reassures you that you’re looking within the right price range and that a lender has already indicated they might be willing to back your purchase. This assurance can make the search more focused and less stressful.
  • Makes You a More Attractive Buyer; It indicates that your offer is worth considering because you’ve already passed an initial financial vetting process.
  • Helps Streamline Your Search; This precision saves you time by focusing your efforts on homes you can afford and prevents the disappointment of falling in love with a property that’s out of reach.
  • It’s Not a Binding Agreement; You’re free to shop around for the best mortgage deal once you’re ready to proceed with a purchase. 
  • Preparation for the Next Steps; It simplifies the transition to the formal mortgage application process, during which the lender will conduct a more thorough evaluation of your financial situation. 

In summary, obtaining a Mortgage Agreement in Principle is a smart move for anyone serious about buying a home. It clarifies your budget, enhances your position as a buyer, and sets a positive tone for your home-buying journey. Whether you’re a first-time buyer or looking to move up the property ladder, an AiP can be a valuable asset in navigating the market.

We’re Here to Help

At The Mortgage Clinic on Ormeau Road, Belfast, our team of experts is ready to guide you through every step of obtaining your Mortgage Agreement in Principle. We understand the market in Belfast and beyond, ensuring that you get the mortgage product that’s right for you. Our experience and knowledge mean we can make the process smoother and more understandable, from start to finish.

If you’re considering taking the first step towards homeownership or moving up the property ladder, getting an AiP is a wise move. It clarifies your budget, shows you’re a serious buyer, and sets the stage for a successful home purchase. Contact us today to start your journey with confidence, supported by our expertise every step of the way.

Helmut Elstner

Managing Director – Independent Mortgage Broker and Insurance Advisor

Helmut started working in financial services in early 2012 and founded The Mortgage Clinic in Belfast in early 2015. He specialises in all types of mortgages from First Time Buyer, Co-ownership, Self Build, Home Movers, Remortgages, Debt consolidation, to Buy to Let.

Three Best Rated Winner 2021
Winner Mortgage Broker of the year 2020
Top Rated Advisor 2021 on Vouchedfor