If you have a good credit rating, then you will probably get a mortgage in principle in a few minutes. If you have a negative mark on your credit file or a generally bad score, then you could be rejected, or it could take a few more days and ask the lender for additional information to feel satisfied with your application. In principle, you will receive a mortgage online, over the phone or, if you apply from a bank or real estate credit company, in a branch. Some lenders will give you a certificate if they offer in principle a mortgage that can be useful to show real estate agents. What this entails differs depending on the lender, but could be a) an explanation that they are willing to lend the amount requested for b) the maximum amount they may be willing to lend, or c) simply a statement that your mortgage was accepted in principle. When you submit an offer to purchase a property, you usually show the seller proof of your mortgage in principle as proof that you should be able to complete the process. A mortgage in principle is not mandatory, but there are several good reasons to make one. A mortgage is in principle an agreement with the mortgage lender that they would like to lend you a certain amount of money to buy a property based on your income and credit rating. There is usually no fees from a lender or broker for a mortgage in principle. Normally, a mortgage broker will only charge once your mortgage is secured (and sometimes not even then – you`ll know more about how mortgage brokers calculate). Whether the maximum amount you can afford is visible to the real estate agent depends on the type of mortgage that was issued to you in principle. A mortgage in principle – also known as the Agreement in Principle (AIP) or decision-in-principle (DIP) – is a written indication from a bank or real estate credit company (the lender) that indicates the amount it might be willing to grant you. It`s not binding (they could always deny you a mortgage on these terms), but it`s a very useful indicator of what you can probably borrow, and real estate agents take them seriously.
A mortgage is not in principle a formal mortgage offer, nor is it a guarantee that the lender will give you a mortgage in the future. Once you have your agreement in principle, you can see real estate within your specific price range; that is, the amount you could possibly borrow, plus each deposit you may have saved. The amount of money they offer you depends on your income and your credit deposit. The principle is precisely that, because it is not a guarantee. After obtaining an agreement in principle, you can start the second part of the mortgage application. If you have an agreement in principle and decide to make a full application with that lender, you must provide more detailed personal data. The lender is not required to lend you the full amount indicated in the AIP. Even if your mortgage is accepted in principle, your full mortgage application could be rejected at a later date. For example, if the lender only performed a gentle credit check, it may not have seen it all in your credit file.