Agreements in Principle
First time buyers (FTBs) are typically asked by estate agents to provide an Agreement in Principle (AIP) before viewing properties. However many FTBs are unaware of the implications of a hard or soft check towards a customer’s credit score.
Most first time buyers will want ‘peace of mind’ and soft credit checks are typically preferred due to not leaving hard footprints on credit files which can impact on credit scores. High street lenders that already conduct soft credit checks at the AIP stage include HSBC, Barclays, Halifax, Santander and TSB. All of them use hard credit checks at application stage.
Due to individual circumstances and lenders criteria in some instances a hard search maybe necessary ie with Coventry, NatWest or Virgin.
Multiple hard searches can impact on your credit rating so it is always advised to speak to an adviser who can search the market and advise you correctly.
The adviser will need to assess the client’s overall circumstances, including income details, employment status, and expenditure such as loans, credit cards and child care commitments to be able to assess affordability.
Each lender has individual affordability calculators and your adviser will know where best to fit you. Credit history will also influence which lenders are suitable as a low score may limit lenders. Further impartial information on credit history can be found at https://www.moneyadviceservice.org.uk/en/articles/how-to-improve-your-credit-rating.
Mortgage deals may not be available and lending is subject to individual circumstances.
Lenders that offer Agreement in Principle certificates alongside a soft check are normally advisable and can put First time Buyers in better buying positions with the estate agent.
A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.