An agreement in principle (AIP) or Decision in Principle (DIP) is universally required these days in order to place an offer with 99% or Estate Agents here in the UK. A question we get asked a lot is ‘How quickly can I get one?’
Here we will explain this much talked about and often confused subject, so you know exactly what it really is and how long it takes.
The short answer is that it takes between 15-30mins depending on which lender you use. Although some companies may advise within 24 hours this is very rare and we think rather excessive. You can apply for an AIP via a Mortgage Broker, Financial Advisor or direct with a Lender, for example your bank or building society.
An AIP is a personalised document which confirms the amount of money a lender believes they would be able to lend you, based on the information you (and anyone you are applying with) have provided, such as income, spending and any deposit you have saved. You don’t normally need to provide evidence at this stage, but it can be useful to have your figures ready. It’s worth mentioning at this point that when it comes to applying for the mortgage there are often different rates and products available at that time, so if you’re using a Mortgage Broker or Independent Advisor, they may well place your mortgage somewhere else at the point of final application.
Having an AIP isn’t a legal requirement prior to a mortgage application, but it will help you when approaching estate agents about properties you may be interested in viewing and offering on. It will also provide you with a guide of what you can afford and start searching for in terms of property price.
You should be aware that as part of attaining your AIP, your broker, financial advisor or lender will have to run a soft credit check, this should not affect your credit score, although they should always ask for your permission first.
It should also be clarified that an AIP should not be confused with a mortgage offer. The mortgage application process requires much more detail and can become complex in some cases. Just because you have been provided an AIP, it doesn’t guarantee you’ll pass a mortgage application later. However, an AIP is a good indication of your affordability, as long as you’ve shared accurate information and there have been no major changes in your situation or economically between gaining your AIP and proceeding with a mortgage application.
So, to sum things up it shouldn’t take longer than 30 minutes to get an agreement in principle. Here at HLC we can print the certificate off and laminate it for you, so it doesn’t get damaged, this saves you having to do it again. It isn’t a formal mortgage offer, but a good indication that you’ll be accepted. And finally, the lender may change the rate or product if there is a time difference between when the AIP and the full application is done.
We hope this was of help. Feel free to search our knowledge centre if you have any more questions about the process of buying a house or anything financial and if you need an agreement in principle click here and we will get someone to call you back and arrange it.