If you have had credit problems in the past or have a limited credit history and are not sure what a bank or construction credit union might lend you, an agreement in principle could give you extra security from your credit perspective. If you have an agreement in principle and decide to make a full application with that lender, you must provide more detailed personal data. The lender is not required to lend you the full amount indicated in the AIP. You don`t need to go through the full application process to get an agreement in principle. This will come later if you have accepted an offer on a property. 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. The size of your contract can in principle be a useful indicator of how much you can borrow. You can use it to search for real estate in your price range. In general, your goal is to leave about 3 to 6 months between applications for any type of credit. Most lenders search for “hard” credit before offering you an agreement in principle that leaves traces in your credit file. 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. To reach an agreement in principle, you must contact a mortgage lender directly or through a mortgage broker. Realtors will often want to make sure that you will be able to get a mortgage on a property before making an offer, so it may be helpful to have an agreement until that date. If you are considering how much money to borrow, the mortgage lender should check your credit history to make sure you would be able to meet the monthly payments. If you apply for an PIA, the lender will check your credit file to determine if you have the right to borrow from them and if they are willing to borrow the amount you need. The first stage of a mortgage is an agreement in principle (AIP) and may include a credit check depending on the mortgage lender. Make sure you get advice on products and lenders before pursuing an agreement in principle, as you can leave a soft or hard footprint in your credit file. Lenders will probably conduct credit checks if you are applying for a mortgage in principle. However, some lenders may do “soft research” and others “difficult research.” A flexible search records credit quality verification as a query, while a difficult search indicates that you have applied for credit.
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