Posted by John Yerou
on July 8th, 2015 10:02am in
Last Updated on December 23rd, 2018 17:43pm.
Estimated Reading Time: 1 minute
Getting a decision (or agreement) in principle is an important first step. An adviser will weigh up the information you provide. Then they’ll confirm whether your data fits the criteria a lender needs, including a credit check.
If all bodes well, they’ll offer you a decision in principle. If you’ve contacted us for your AIP, we can often get it back to you on the same day.
What an AIP isn’t
Submitting your information through an online portal like a calculator is not the same. That’s only a guide to how much you can borrow.
Nor is a decision in principle the same as a mortgage offer. An adviser or broker can offer an AIP based on a preliminary check. But it’s the underwriter who’ll get back with a firm mortgage offer.
What an AIP does is fortify your position and confirm to a vendor that you’re interest is serious. If you’re in a battle with another party for the same house, your AIP may have a positive impact on negotiations.
Beware of AIPs on the High Street
One of the most common calls we get is from distraught contractors who’ve been rejected on the High Street.
A lender has offered them an AIP based on what they’ve told them they earn plus a credit check. But because of the way the adviser has packaged the application, the underwriter has rejected it.
The contractor has already got so far along the road to buying their home, even incurring some costs. It’s bad enough they’ve had the rug pulled from under their feet after acting on what they thought was solid information.
But what’s worse is that they’ve racked up a failed credit check. This will put other lenders, lenders who could have otherwise helped them, on their guard for no reason.
Often, we can help in this situation. But for those who may have a blip on their credit as well as a rejection, the damage could already be irreparable. At least in the short term.
The secret to protecting your credit and your integrity? Stay away from the High Street at all costs.
Author: John Yerou
John Yerou is a pioneer of contractor mortgages and owner and founder of Freelancer Financials, Contractor Mortgages®, C&F Mortgages and Self Employed Mortgages, trading styles and brands of the award-winning Mortgage Quest Ltd.