A Mortgage Agreement in Principle is essentially a document to prove you have a mortgage in place. It is something we obtain for all our clients, and almost all lenders offer them. It demonstrates that you are creditworthy because of the Agreement certificate to be issued, you must pass the Lender’s credit score.
A Mortgage Agreement in Principle is not a guarantee that you will definitely get a mortgage as your full application will require further background checks (such as evidence and income) and a satisfactory valuation of the property itself. However, we think it’s a good idea to get one done at the earliest opportunity for the following reasons:
1. Negotiating Power
2. Avoid Disappointment
3. Knowing your Limits
When you are ready to offer a new home, most Estate Agents will undertake due diligence and ask you to produce evidence that you have funds available to complete the purchase. This will take the form of bank statements and an Agreement in Principle certificate that we can provide for you.
Once you have provided them with enough documentation the Estate Agent will naturally stop marketing the property and put a “Sold” or “Sale Agreed” boar outside the property to let other people know it’s off the market.
Suppose you already have a mortgage agreed upon before you make an offer. In that case, you are making yourself appear as an attractive proposition as this proves you are not making an offer on a “whim”, you’ve thought about how you’re going to fund the purchase and have done something about it. This might persuade a seller to accept an offer you put forward on their property underneath the asking price.
When it comes to buying a house some clients have always “put the cart before the horse” to say they go full steam ahead and make an offer on a property without first checking that they are actually in a secure financial position to proceed. This can lead to terrible disappointment if the mortgage application fails because, by that time, they have got their heart set on their new family home.
Furthermore, your mortgage getting refused isn’t always down to the offer you put in. It can sometimes be something else. For example, there may be a niggling issue on your credit report, perhaps a disputed mobile phone bill that can easily get rectified. Maybe you thought you were on the voter’s roll and you’re not – once again that can be sorted out given a few weeks.
Maybe you can’t get a mortgage at all, and if that’s the case, it’s better that you know now rather than mess people about, though we may be able to help if you contact us and we’ll be able to tell you what you need to do to improve your credit-worthiness for the future.
By now you know you’ve got a good credit rating because you’ve never got turned down for credit, you’ve registered on the voter’s roll and you’ve always made your credit card payments on time.
You could approach ten different Lenders these days and get ten different maximum mortgage amounts; they all calculate affordability in their own unique ways. If you’re self-employed in Leeds: some Lender can take your net profit, others your salary and dividends. Some use your latest year, others an average over three years.
Knowing your borrowing limits is essential as then you know for sure what your price range is.
Our team of Specialist Mortgage Advisors in Leeds may be able to advise you of the maximum mortgage available to you. Even more importantly together, we’ll work out how much you can afford to pay back each month.