Mortgage offers and decisions in principle
For many borrowers it is important to secure a 'decision in principle' or an 'agreement in principle' before they make an offer to purchase a property.
A decision in principle (DIP) or agreement in principle (AIP) provides a good indication to the client (and increasing the estate agent) they would qualify for a mortgage. However, it is not a mortgage offer and does not provide a guarantee of lending.
Initial agreements require a minimal amount of information, and the lenders use mortgage underwriters and property valuers to ensure the applicants and their properties meet their acceptance criteria.
The agreement is typically valid for three months.
What is a mortgage offer?
Once your offer to buy the property is accepted, you have passed the decision in principle and your application has been submitted, the lender will assess the case. When the lender is happy, and the property has been confirmed as sufficient security you will be provided with a mortgage offer.
Mortgage offers typically last between three and six months. Although, some lenders have specific completion deadlines and set product dates. It is also worth noting, purchase and remortgage offers can be valid for different time periods.
Santander, HSBC and Yorkshire Building Society all provide six-month offer deadlines for purchases and remortgages. Halifax mortgages are set to the product expiry date.
What happens if the mortgage offer expires?
If your mortgage offer expires and you need to get it extended, the lender is likely to re-assess your application and potentially carry out a new credit score and another affordability assessment. It may also carry out an updated property valuation.
Once your offer has been produced, it is not advisable to take out new credit cards or loans. If the lender checks you again and you have more debt or you've been declined for credit, it may affect the application.
Trinity can help you secure a decision in principle
If you approach some of the high street banks and building societies, you can wait weeks for an appointment with an adviser. While some appointments can also take hours to complete.
If you call one of our brokers and provide us with the list of documents we require, if you are in a hurry we can secure a decision in principle on the same day.
Aaron Strutt, product director at Trinity Financial, says: “Most mortgage lenders are offering their lowest ever rates and if you approach one bank, it's advisers will not check the market and tell you if there are any cheaper or more suitable mortgages available to you.”
To secure a 'decision in principle' call Trinity Financial on 020 7016 0790.
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