We launched our house in June and accepted an offer within a week. Our chain (of 3) was not ready to wait for us to find a property, so we concluded our sale and live with relatives until we bought somewhere. We had an agreement in principle, but it expired, and our mortgage advisor told us that another application would affect our creditworthiness. We are in a good position because we have nowhere to sell and a cash deposit, but we have not applied again for an AIP. For the last month or nothing at all on the market in the region we want, but we hope that this will soon change and in fact we see a house on Saturday, if my question is, should we have an agreement in principle before we start seeing and offerings? What did you do? To reach an agreement in principle, you must contact a mortgage lender directly or through a mortgage broker. Most lenders search for “hard” credit before offering you an agreement in principle that leaves traces in your credit file. When we surveyed more than 3,000 homeowners in July 2019, 53% said they had an agreement in principle before applying for their mortgage. About 25% said they didn`t know or didn`t remember having one, and only 25% said they didn`t. PIAs are in my opinion a sales tactic for some brokers and most clients these days are experienced enough to get advice on their upper purchase limit before looking and, unless there is something extraordinary, a customer just needs an AIP at the time of application. A mortgage in principle is not mandatory, but there are several good reasons to make one. A wholesale mortgage is exactly what it looks like — an indication of what a lender can actually borrow. It remains conditional on you being able to meet the mortgage criteria in practice, and is not a promise or guarantee. A mortgage in principle – also known as the Agreement in Principle (AIP) or decision-in-principle (DIP) – is a written indication from a bank or real estate credit company (the lender) that indicates the amount it might be willing to grant you.
It`s not binding (they could always deny you a mortgage on these terms), but it`s a very useful indicator of what you can probably borrow, and real estate agents take them seriously.