An agreement in principle, also known as a mortgage in principle or a decision in principle, is a conditional promise from a lender to lend you a certain amount of money to buy a property. It is not a formal offer of a mortgage, but rather an indication of how much you could potentially borrow and the terms and conditions of the loan.
To get an agreement in principle, you will need to provide some basic information to the lender, such as your income, expenses, and credit score. This will allow the lender to assess your eligibility for a mortgage and give you an idea of how much you could borrow.
An agreement in principle is not a binding agreement, and it does not guarantee that you will get a mortgage. It is, however, a useful tool for house hunters, as it can give you an idea of what you can afford and help you narrow down your property search.
When you get an agreement in principle, it will usually be valid for a set period of time, typically between 60 and 90 days. This gives you time to find a property and make an offer. If the lender is happy with the property you have chosen and the information you have provided, they may then make a formal mortgage offer.
It is important to note that getting an agreement in principle does not mean that you have to take out a mortgage with that particular lender. You are free to shop around and compare deals from different lenders to find the best one for you.
If you do decide to go ahead with a formal mortgage application, the lender will carry out a more detailed assessment of your finances, including a credit check and a valuation of the property. If everything checks out, they will then make a formal mortgage offer, which you can choose to accept or decline.
In summary, an agreement in principle is a conditional promise from a lender to lend you a certain amount of money to buy a property. It is not a binding agreement, but it can give you an idea of what you can afford and help you narrow down your property search. If you decide to go ahead with a formal mortgage application, the lender will carry out a more detailed assessment of your finances before making a formal mortgage offer.