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In this blog, we will explain what an agreement in principle is and how it can benefit you as you look to buy or move home.
The changes in government guidelines around social distancing are potentially making it easier to move home. So, if you are looking to move, it is a good time to speak with a professional mortgage broker.
A Mortgage Broker can assist you with reviewing your mortgage options in what is a challenging time with lending criteria. So, gaining a Mortgage Agreement in Principle has probably never been more important. Why is an Agreement in Principle important?
An agreement in principle shows that you are serious about your intentions to buy and that you have done your homework. Both property sellers (vendors) and Estate Agents are far more likely to accept an offer on a property where the prospective purchaser has an agreement in principle.
Having taken steps to arrange your Mortgage Agreement in Principle will also generally speed up the mortgage process and gaining a mortgage offer. You may have heard of an agreement in principle being called;
Agreements are a confirmation from a lender/broker stating that a lender will potentially lend a certain amount to you before you’ve finalised the purchase of your home. We say “potentially”, as a full mortgage application will involve a full underwriting assessment by the respective lender of all information, supporting documentation and a property survey / valuation. This cannot be achieved by completing a Mortgage Agreement in Principle.
It should be noted that many online agreement, systems and processes will take only basic information and do not request supporting documentation for review. These very basic assessments may be misleading as only basic information is assessed.
What are the Steps to gaining a Mortgage Agreement in Principle?
A mortgage agreement can be gained from individual lenders; however, it is important to note that online systems will only take account of the information that you supply and give you access to the individual lenders decision-making and equally products.
Mortgage brokers will give you access to a wide range of lenders and their differing criteria and affordability assessments. This will generally give the mortgagee a wider range of options to consider.
Information you will need to provide for a full mortgage agreement;
Supporting documents would also be required by most lenders when applying for a mortgage and it makes sense to get these reviewed by a professional during the Mortgage Agreement process.
By taking this step, it will make the accuracy of the research more exact. Equally, this will dictate which lenders will potentially accept an application based on the amount of loan required. Typically documents required will consist of the following (but are not limited to);
Proof of income, last 3 months wage slips or 2 years tax calculations for self employed (for variable pay this assessment is imperative to give an accurate assessment)
Cutting out these important steps could provide you with inaccurate assessments being made and lead to disappointment. Especially if a mortgage application is subsequently declined.
Why, it’s a good idea to get an agreement in principle?
A full mortgage agreement process undertaken by mortgage brokers will generally give you a better understanding of;
Getting a mortgage agreement completed early in the home buying process is an important step. If completed accurately it will give you parameters as to what potential properties are within your grasp.
An agreement in principle will give you the comfort of knowing that you have been professionally assessed for criteria, affordability and the recommended lender will have performed a credit check.
It will also offer some reassurance that you’ll be able to buy a property, especially if you have any concerns regarding elements such as your credit history. A mortgage agreement in principle will typically last between 60 and 90 days, dependent upon the lender. If it expires before you need it, you can always re-apply, but be careful about requesting too many agreements in principle. Lots of credit searches could damage your credit score.
To get an agreement in principle, you’ll either need to approach a mortgage lender directly or apply through a mortgage broker, like My Mortgage & Protection Experts. A lender will only be able to make an agreement based on their criteria, affordability calculations and their credit score assessment.
A broker will be able to assess your position across a broad range of lenders, who will all have very differing criteria, affordability assessments and attitudes towards a credit profile.
It should be noted that you do not need to go through the full mortgage application process to get an agreement in principle. This will come once you’ve had an offer accepted on a property. Gaining your Mortgage Agreement in Principle
Our team of mortgage brokers and para-planners are mortgage professional and are experienced in assisting clients to gain a Mortgage. Our aim being to find you the most suitable mortgage to meet your needs and requirements. Then to gain you a mortgage agreement in principle quickly.
One of the first steps with My Mortgage & Protection Experts in being able to gain you an Agreement in Principle, is understanding your personal requirements This can then progress to providing you with personalised research. This is an important step to ensure that you gain an agreement with the most appropriate lender to suit your needs and circumstances. MMPE have 2 routes, firstly the Full Assessment (recommended) and secondly an online Mortgage Eligibility Check. The Full Assessment would be our recommended route as this we can help you follow the processes already described in the paragraph “What are the steps to gaining a Mortgage Agreement”. This method will give you the most accurate assessment and results, schedule a time to gain your Mortgage Agreement in Principle The My Mortgage & Protection Experts “Mortgage Eligibility Check”, will give you a quick indication as to whether we believe we can get you a mortgage (this is subject to credit score and financial assessment). This quick and simple process generally only takes a couple of minutes to complete and will give you an instant result once you have completed the online form. This process does not conduct a credit check so will not leave a footprint on your credit file.
At the end of the process you can download your personalised Mortgage Agreement Certificate.
Our recommendation would be to engage in our more detailed assessment. By doing this you will benefit from personalised research and a full assessment.
This will provide you a greater assurance that the mortgage you need is achievable. As a minimum, we would suggest that you need to supply all relevant information that a lender would require to assess during a full mortgage application.
Working with a broker like My Mortgage & Protection Experts will offer you a professional and personal service and protect you from unnecessary Credit Checks.
Note that generally, My Mortgage & Protection Experts do not charge you for gaining a Mortgage Agreement.
My Mortgage Experts & Protection Experts Ltd (FCA 937076), is an Appointed Representative of King Mortgages Ltd.
King Mortgages is authorised & regulated by the Financial Conduct Authority (FCA). King Mortgages Ltd is entered on the financial services register http://register.fca.org.uk/ under reference number 803561.
The information contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
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Changes in property value, coupled with a potential reduction in your loan amount (with a repayment mortgage), mean a change in the equity available in your property (Loan to Value); hence there could be improved opportunities for a better mortgage for you.
Sussed will track when your mortgage is due to expire (usually when your mortgage payments rise substantially as you will automatically transfer to your lender’s standard rate).
The app will alert you when it’s the right time to discuss your options with your mortgage broker.
Sussed can help you plan.
This feature is ideal for today’s economy and increasing prices. Sussed will continually scan the market, looking for the best-fixed rates available, especially when interest rates are rising.
Using a series of algorithms, our clever technology can identify longer-term fixed rates available today that could save money against predicted rates at the end of your current product term (including the cost of transfer) – sussed is doing all the hard work.
With automatic property value updates and your Mortgage information loaded, this feature calculates the amount of equity and the maximum potential loan that may be available within a landlord’s portfolio. This will assist with seeing if there is the opportunity for to perhaps buy another property from leveraging your portfolio.
Within sussed, you will also be able to see each of your properties with a roadside picture, a confirmed property value, monthly rental, current mortgage balance, payments, interest rate and the Loan to value/Gross rental yield.
Sussed can help you manage your portfolio.
This feature is there waiting for interest rates when they reduce. Using the same technology as Rate Riser, sussed will identify if your current deal is now able to be improved.
Should the interest rates decrease, sussed will compare deals available on the day with your existing deal and flag if there is an opportunity for you to save money by switching.
There are price limits on homes you can buy with an equity loan. The limit is different for each region in England.