We have an AIP, but are worried about our credit history?
Posted on 5 April 2014 by SGL
We have received an AIP but how likely is it that our mortgage will be accepted as our credit history isn't great?
Agreements In Principle (AIP's) are a hot topic at the moment, especially on purchase cases as many estate agents want to see one as a demonstartion of your ability to get the mortgage needed to buy the property. However these agreements are rarely as definite as they seem, and in many cases when the full application is submitted, loan sizes can be reduced once the complete situation is known. The loan to value, as well as the rest of your overall financial position is taken into account, but it does depend on exactly how 'not great' your credit history is.
Some AIP's leave what is known as a 'soft footprint' which means that not all of the credit information is searched at that point, and again when the full credit score is done, additional information can come to light which has an adverse impact on the case.
Also, as lenders can regularly change products and criteria, it isn't worth deciding which lender to go too early, as this may change by the time you find the home you want to buy.
A good broker will know, once they've completed a 'fact find', which lenders you are likely to be eligible for, without the need for AIP's to be done, and can confirm to the estate agent (who acts for the vendor, not the buyer) that you should be able to secure the mortgage you need. Then once you've found a property, had your offer accepted and know exactly how much you need to borrow, we can formalise proceedings at that point.
If you have any trouble once you've got to a full application, then please contact one of our consultants on 0344 346 3672 and they'll be able to give you an idea of how we can help.
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Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
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