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What does 'Agreement in Principle' mean?

Agreement in Principle

A mortgage lender will, after obtaining certain information from the buyer, issue an Agreement in Principle (AIP). The information given by the buyer is taken at face value and not checked, it is simply the mortgage lender saying "If what you have told us is true, we are prepared to lend you this much". See the chapter Sorting Out Your Mortgage for more information.

See also Pre Arranged Mortgage.

Search Results for 'Agreement in Principle' in How to Really Buy a Property

"...Most buyers are now aware of the Agreement in Principles (AIPs). These are however, exactly what they say they are. Briefly translated an AIP is the bank saying, "If what you have told us is true then we are prepared to lend you this much". The problem is that we often forget, or don't know it is important, that: ..."
"...So if you have only arranged an Agreement in Principle there is still a great deal which could affect the bank's actual decision. The credit scoring they carry out may radically change what you can borrow. As such if you have found a really good loan or you expect to find a property quickly you should apply for the mortgage there and then even though you do not have a property in mind. Most financial advisers and lenders will try to resist this as it means more work without a full guarantee that they will get the business. Insist on it. This means you can be completely confident when you offer that you can afford it and the process will proceed smoothly and without stress. ..."
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"... Bad Agents. For now its worth knowing the two documents that are requested the most: An Agreement in Principle or Pre Arranged Mortgage - see Sorting Out Your Mortgage - to show you can afford the property A copy of your bank statement to show you can afford the deposit An Agreement in..."
"... Out Your Mortgage - to show you can afford the property A copy of your bank statement to show you can afford the deposit An Agreement in Principle (AIP) If you will need a mortgage to buy a property the lender will be able to supply you with an agreement in principle based on a few..."
"...If you will need a mortgage to buy a property the lender will be able to supply you with an Agreement in Principle based on a few simple questions. They will generally want to know how much you earn every year and how much you pay in debts every month (say to credit cards or bank loans). They take one from the other and come up with a figure that they think you can afford to pay them every month. Calculating this backwards over the term of the mortgage (the time they will give you to pay it back, usually twenty-five years) gives the amount they are prepared to loan. ..."
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"...I confirm that I wish to offer £235,000 on 10 High Street, London, E6 2JN. The offer is to include the curtains, carpets and cooker. My offer is made up of a £200,000 mortgage from Barclays Bank and £25,000 in cash. I have nothing to sell and would want to exchange in four weeks time and complete four weeks after that. I attach my Agreement in Principle and a copy of a bank statement to confirm my finances. The solicitor I will be using is ... and their telephone number is ... ..."
"... will want to deal with you only. Show your serious intentions by attaching proof of your ability to proceed (an Agreement in Principle or pre arranged mortgage), the solicitor you have chosen and a bank statement or otherwise proving the cash element. Things that will always act in your..."
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"...In the first instance the lender will give you an Agreement in Principle (AIP). This is a superficial agreement which basically says, "If what you have told us about yourself is true and the property you choose is worth what you plan to pay for it, we will lend you a specified amount". You can get such an agreement without specifying a property and lenders issue these more as a guide to what you can afford than anything else. ..."

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