Whether you’re a first time buyer or an old hand at the mortgage game, if you need a mortgage you’ll also need a mortgage agreement in principle to proceed with your house purchase.
Just to clarify, a mortgage Agreement In Principle (AIP) is where the lender will carry out a credit score on you and give you an indication that they would be willing to lend subject to valuation. Some lenders refer to it as ‘decision in principle’.
As they are going to carry out a credit score this is likely to leave a ‘footprint’ on your credit file and technically this can affect your credit rating. If this is the case then you want to be prepared, as you want the best chance possible to pass the credit score.
Check Your Credit Report Before Applying For A Mortgage Agreement In Principle
First of all check out your credit report and see how you will look to any potential lender. I always point people towards Noddle.co.uk as it is a free for life rather than one of those free for 28 days then we’ll charge you as you will inevitably forget to cancel. That said lenders tend to use Call Credit (Noddle), Experian and Equifax. So if you don’t think you are getting the full picture from Noddle then you might want to try the other two.
Once you have got your credit report you might need to act upon the information. For example if there has been activity on your file you don’t recognise you’ll need to find out what it is and if it is negative, get it sorted.
If you don’t have a lot of credit this can also be negative. In these circumstances I often recommend you get a credit card wherever you can (try your bank in the first instance) and use the card sensibly. Maybe fill the car up once a month with it and then pay the bill in full. After a few months you should see an improvement in your score.
Of course if you want to get an agreement sorted now regardless of your credit score then make sure you have all the correct information available regarding:
Income – last three months payslips and p60, do you get bonuses or commission, if so then have the exact figures for the last year.
Expenditure – how much do you pay for loans, Hire Purchase, Childcare etc.?
Credit Cards – is there an outstanding balance, even if you pay off each month you’ll need to know how much is outstanding today.
Deposit – You’ll need to know how much you are putting down as a deposit so the lender carrying out the AIP can put you in the right loan bracket.
Some lenders leave a credit footprint on your file so the more times you applying the worse it can be for you. However, some lenders don’t leave a footprint on your file so if you can find them you are having a shot at nothing that won’t affect your score. Most brokers will be able to point you in the right direction.
I hope these tips help and if you need any further guidance then feel free to get in touch.
