How To Get A Mortgage Decision In Principle
The first step in obtaining a mortgage is to arrange an agreement in principle with a mortgage lender, but how do you go about getting one?
The mortgage industry is notorious for jargon and it is not uncommon to have a few names for the same thing. This initial stage in the process of applying for a mortgage can be known as; Decision In Principle (DIP), Agreement In Principle (AIP) or a Mortgage Promise… they are all the exact same thing.
When buying a new home or raising funds on an existing home a decision in principle is the best place to start. At this stage a mortgage adviser will input a limited amount of information about you, your income and your credit details as well as some key information about the possible mortgage you wish to apply for into a lenders online system.
The lender will then run a credit search. In most cases this credit search will be what is known as a ‘soft search’ which means only you and the lender who conducted the search can see it ever happen, this is so it will not have a negative impact on your credit score. They also check over your details to make sure you fit certain areas of their criteria such as affordability and then produce a result. The decision in principle will either return as a pass, decline, conditional pass or a refer. If you receive a conditional pass the lender may have cleared you on credit score but may need additional information or offer you a different loan amount. If you receive a refer the lender will pass the application over to a human underwriter to check over to then give a pass or decline decision.
Mortgage Promises are not legally binding and you are free to move to a different lender if you do not get the result you wished for or if your circumstances change.
Many Estate Agents will require you to have a decision in principle in place before being able to put forward an offer to buy a property. Remember, it is a legal requirement for an Estate Agent to forward all offers to sellers, but without a decision in principle you would not be considered as being in a good position to buy and the seller may not wish to accept your offer until they know you have a mortgage agreement in place. Also remember you are not required to sit in front of the agents in house mortgage adviser before an offer will be passed over, this is actually illegal to suggest otherwise and is very poor practice which is common among large estate agency chains and has been documented on BBC’s Panorama.
But down to the question in hand, “how do I get an agreement in principle?” its simple… the best place to get a decision in principle is through an independent whole of market mortgage adviser. With their expert knowledge they will know the best lender for your situation and will be able to organise the whole thing for you. Some banks are taking up to 3 weeks to book in mortgage appointments and that appointment can take up to 3 hours. A specialist broker can deal with your enquiry in more detail much quicker and usually within a matter of days not weeks.
At Fordyce & Playle we help our clients obtain decision in principles within 48 hours (in most cases same day) so you can get on with the more exciting part of buying a home or renovating your existing one. And best of all there is no charge to obtain a mortgage promise so our service to you is free!
If you are interested in knowing more or would like independent mortgage advice in Eastbourne, feel free to call one of our Brokers on 01323 409 849 or email office@sentryadvice.co.uk
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of Sentry Advice Limited. All comments are made in good faith, and neither Sentry Advice Limited nor the author will accept liability for them. No advice is given in any posting. Please contact your adviser for more information or advice.
Mortgages to Purchase a Property
Mortgages to purchase a property a fee of £495 is payable on application – this is fully refundable if we are unable to obtain a mortgage offer.
Remortgages
For processing a remortgage a fee of £295 is payable on application – this is fully refundable if we are unable to obtain a mortgage offer.
Rate Switch / Product Transfer
For processing a product transfer/rate switch where you are remaining with your current lender a fee of £145 is payable on application.
Adverse Credit
For applications where there is a history of adverse credit then a total fee of £495 will be charged, of which £245 is payable at the point a personal recommendation is made, whether you decide to proceed or not. The remaining £250 is payable if/when an application is made and is refundable if we are unable to obtain a mortgage offer.
Equity Release Mortgages
A total fee of £990 will be charged, of which £495 is payable at the point an application is made with a provider. The remaining £495 is payable if/when the application completes.
We can accept payment via bank transfer, credit/debit card via PayPal.
© 2020 Sentry Advice Limited (company number:8257351)
Sentry Advice Limited are authorised and regulated by The Financial Conduct Authority and are entered on the Financial Services Register (www.fca.org.uk/register) under reference number: 624557
Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it. All enquiries will be passed to a regulated Adviser with appropriate qualifications. The information on this website is for use of residents of the United Kingdom. No representations are made as to whether the information is applicable or available in any other country which may have access to it.
Head Office Registered Address: 89 High Street, Uckfield, East Sussex TN22 1RJ