It is important to remember that, in principle, an agreement is not a mortgage offer or official confirmation that you have a mortgage. To do this, you must go through the full application process. To reach an agreement in principle, you must contact a mortgage lender directly or through a mortgage broker. A policy decision shows that one can theoretically afford to buy a property. This could make you a more attractive buyer and set you apart from other potential buyers. The size of your contract can in principle be a useful indicator of how much you can borrow. You can use it to search for real estate in your price range. A decision in principle is not a guarantee. If you go through the full application process, the lender will take a closer look at your income and credit history.
You can choose not to give yourself credits at this point. You don`t need to go through the full application process to get an agreement in principle. This will come later if you have accepted an offer on a property. If you remortgaging, there is less need for this information, so you would file an agreement in principle once you have chosen a lender and a product. When we surveyed more than 3,000 homeowners in July 2019, 53% said they had an agreement in principle before applying for their mortgage. About 25% said they didn`t know or didn`t remember having one, and only 25% said they didn`t. Make sure you get advice on products and lenders before pursuing an agreement in principle, as you can leave a soft or hard footprint in your credit file. If you have had credit problems in the past or have a limited credit history and are not sure what a bank or construction credit union might lend you, an agreement in principle could give you extra security from your credit perspective. Most lenders search for «hard» credit before offering you an agreement in principle that leaves traces in your credit file. The important thing is that not all mortgages are equal in principle. So be warned and they can give you a misguided sense of security.
Make sure you understand the extent of the validation using the lender`s instruction policy and that it includes a credit search.