When it comes to buying a home, one of the first steps is to get an agreement in principle (AIP) from a mortgage lender. AIP is a certificate that confirms the amount that a lender is willing to lend to a borrower, based on their income, credit score and other financial information. But how long does an agreement in principle last?
The answer is that it varies. An AIP is typically valid for around 90 days, but this can depend on the lender. Some lenders may only offer an AIP for 30 or 60 days, while others may provide one for up to six months.
It`s important to note that an AIP is not a guarantee of a mortgage. It is simply an indication of how much a lender is likely to lend, based on the information provided by the borrower. Once a borrower finds a property they want to buy, they will need to go through the full application process, which involves a more detailed check of their finances.
If a borrower`s circumstances change during the validity period of the AIP, such as losing their job or taking on new debts, they may need to reapply for an AIP or go through the full application process again. In some cases, a lender may also withdraw an AIP if they discover new information about the borrower`s financial situation that was not disclosed during the initial application.
It`s worth noting that some estate agents may ask to see an AIP before allowing a potential buyer to view a property, as it shows that the buyer is serious about making an offer. However, it`s important to only apply for an AIP with a lender that you are considering using for your mortgage, as each application can leave a mark on your credit report.
In summary, an agreement in principle typically lasts for around 90 days, but this can vary depending on the lender. It`s important to remember that an AIP is not a guarantee of a mortgage and borrowers may need to go through the full application process once they have found a property they want to buy.