AGREEMENT IN PRINCIPLE
1. The first stage is to get what’s called an AIP which stands for agreement in principle – this means that the lender in question is happy with your overall profile. This is sometimes referred to as DIP or MIP which stand for decision in principle or mortgage in principle but they all mean the same thing. An AIP is a credit search or a credit score (there are different things by the way) by a lender along with a basic affordability check and identity check. The credit referencing that’s carried out aims to look at your overall score and credit conduct typically for the last 6 years to determine how much of a risk you pose to the lender – are you likely to default (not pay) your mortgage based on your previous track record. The things which contribute to your overall score that can make a difference is; making sure you pay any debts or finance agreements on time and in full each month, make sure you’re registered on the electoral roll & if you have and use credit cards try not to max them out. Getting registered on the electoral roll can really boost your overall credit score and profile as it helps to tie you to your address. If you’re not registered on the electoral roll then roll then follow this link to get registered. You should be aware that an AIP is only as good as the information which is entered into a lenders system and therefore mortgages can still be declined when it comes to full application if you’ve failed to disclose something which materially alters your profile. To make sure that doesn’t happen you need to be transparent and honest when you start the process and provide all the documents that are asked for so we can prevent issues down the line.
FULL MORTGAGE APPLICATION
2. Once you’ve found a house to buy, made an offer and it’s been accepted by the vendor (seller) we then need to submit the full mortgage application (FMA) to the lender which is when a hard credit search will be done and we will need to upload all the documents that the lender has asked for. This is also when you’ll need to pay any survey/valuation fees.
UNDERWRITING
3. Once the application has been submitted and the documents uploaded a person called an underwriter then assesses your case to make sure that you fit their lending criteria that you are who you say you are and that your income documents match what has been declared on the application. There’s up to 30 different metrics and checks done to make sure you’re a good fit for the lender.
VALUATION
4. Usually at the same time the lender is underwriting your case they will instruct a surveyor to do a mortgage valuation on their behalf to check that the property meets their policy, is in good order & is worth what you are willing to pay for it – there are different levels of survey depending on how much information you want about the home you are hoping to buy.
MORTGAGE OFFER
5. Once the lender has the valuation report back, they’ll have one final check and if they’re happy with everything they’ll issue the mortgage offer – this is the point at which you’ve been formally approved for your mortgage and you can do a happy dance to celebrate being one step closer to becoming a homeowner.
