As a potential homeowner, getting an agreement in principle from a mortgage lender can be an exciting step towards owning your dream property. However, it`s important to know how long the agreement in principle lasts and what implications it may have on your home buying journey.
An agreement in principle, also known as a mortgage in principle or decision in principle, is a document that confirms how much a lender is willing to lend you based on your income, expenses, and credit history. It`s a preliminary assessment of your affordability and the amount you may be able to borrow before you submit a full mortgage application.
The duration of an agreement in principle varies depending on the lender. Some may last for 30 days, while others can last up to 90 days. It`s worth noting that the validity period can sometimes be extended on request, and some lenders may allow you to get a new agreement in principle if the previous one expires.
It`s crucial to remember that an agreement in principle doesn`t guarantee that you`ll get the mortgage you applied for. It`s only an indication that you`re in a good position to apply for a mortgage and that the lender is willing to consider your application based on initial information.
If it takes you longer than expected to find a property or you make significant changes to your financial circumstances, such as changing jobs or getting a pay cut, the agreement in principle may no longer be valid. In this case, you`ll need to get a new agreement in principle or a reassessment from your lender to see if you still meet their criteria.
It`s also worth noting that getting multiple agreements in principle may affect your credit score. Every time you apply for an agreement in principle or a mortgage, the lender will carry out a credit check. Too many credit checks in a short period can lower your credit score, which may affect your ability to get a mortgage or other forms of credit in the future.
In summary, an agreement in principle typically lasts for 30-90 days, depending on the lender. It`s not a guarantee of a mortgage but an indication of how much you can borrow based on initial information. If it expires, you`ll need to get a new one or a reassessment from the lender. Be mindful of the impact of multiple credit checks on your credit score and only apply for agreements in principle when necessary.