An agreement in principle (AIP) – also called Mortgage In Principle (PMI) decision – is a written estimate or statement from a lender to say how much money it would lend you if you bought a property. There is usually no fees from a lender or broker for a mortgage in principle. Normally, a mortgage broker will only charge once your mortgage is secured (and sometimes not even then – you`ll know more about how mortgage brokers calculate). A mortgage in principle can also save time in the purchase process, both in terms of accepting your offer and speeding up the mortgage application process. Whether the maximum amount you can afford is visible to the real estate agent depends on the type of mortgage that was issued to you in principle. A mortgage in principle is not mandatory, but there are several good reasons to make one. You can complete the entire process online – it should in principle only take about 15 minutes to get a mortgage. Filling out online forms with some lenders can even make you an immediate offer. It may take longer if you do it over the phone or in the store.
If you remortgaging, there is less need for this information, so you would file an agreement in principle once you have chosen a lender and a product. In principle, a mortgage agreement is followed by a full mortgage application and the information provided in the original decision is accompanied by referrals. It is therefore important that the facts made available to the mortgage lender be correct for the first time, as the erroneous information of their insurers is reprehensible and may lead to rejecting your case or changing the terms they are willing to offer. Once you have your agreement in principle, you can see real estate within your specific price range; that is, the amount you could possibly borrow, plus each deposit you may have saved. You don`t need to get an agreement in principle, but it can sometimes help if you`re very handsome (see « How an AIP Can Help, » below). In principle, you will receive a mortgage online, over the phone or, if you apply from a bank or real estate credit company, in a branch. In principle, a mortgage requires a credit check. This is done either by an app or a difficult search on your credit file, depending on the lender. 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. To reach an agreement in principle, you must contact a mortgage lender directly or through a mortgage broker. Some lenders will give you a certificate if they offer in principle a mortgage that can be useful to show real estate agents. What this entails differs depending on the lender, but could be a) an explanation that they are willing to lend the amount requested for b) the maximum amount they may be willing to lend, or c) simply a statement that your mortgage was accepted in principle. Keep in mind that if any of the details you enter, if they change in principle for the mortgage during the validity period (for example, they change jobs), you may need to check with your mortgage broker or lender to make sure that your mortgage is in principle still valid, and renew the application if necessary.