Agreement in Principle: Is It Safe?
When buying a property, you may have heard the term “agreement in principle” or AIP, being thrown around. This is a preliminary agreement or offer from a mortgage lender that gives you an idea of how much they may be willing to lend you. But is it safe to get an agreement in principle? Here’s what you should know before getting one.
The first thing to understand about an agreement in principle is that it`s not a guarantee of a mortgage offer. It`s a preliminary indication of what a lender may be able to offer you based on the financial information you’ve provided. It`s important to note that the AIP is not a legally binding agreement, and either party can back out at any time.
However, getting an agreement in principle can help you identify any potential problems earlier in the application process, allowing you to address them before making a full mortgage application. It can also give you a better idea of how much you can afford to spend on a property, which can help you focus your property search.
So, is it safe to get an agreement in principle? Yes, it is safe, and it can be beneficial to get one before making a full mortgage application. However, there are some things you should keep in mind when getting an agreement in principle.
First, make sure the lender is reputable and trustworthy. Look for reviews or ask for recommendations from friends or family who have recently gone through the mortgage process.
Second, be honest about your financial situation when applying for an agreement in principle. If you provide inaccurate information, it may affect your ability to get a mortgage later on.
Finally, be aware that getting an agreement in principle will require a credit check, which can affect your credit score. However, the impact is usually small and short-lived.
In conclusion, getting an agreement in principle is typically a safe and helpful step in the mortgage process. Just be sure to do your due diligence and apply honestly to ensure a smooth and successful mortgage application later on.