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Obtaining a decision in principle for bad credit mortgage


Obtaining a decision in principle for bad credit mortgage

Mortgage in principle simply refers to a written estimate from a mortgage lender, stating that you will be given a certain amount to borrow. When this is shown to estate agents and vendors, it makes them believe the individual is a serious buyer and can  get a mortgage. If you are getting the mortgage with someone, the mortgage in principle will show how much you will be loaned on the joint application. If you are buying a property in UK, you will have to get an agreement in principle before you can submit a bid. Mortgage in principle shows sellers that you can afford the property you are interested in purchasing and even if you have a bad credit, the mortgage in principle will show a lender whether you can afford to repay the loan or not. Although this is offered in principle , the lender still reserves the right to turn down your application or change the details of the deal. If you spend a lot of time between getting the mortgage in principle and applying for a mortgage, you might end up getting a better deal due to changes in the interest rate. Mortgage in principle can also be called decision in principle, mortgage promise, agreement in principle, or approval in principle and it gives an idea of the size of the property you are eligible to apply for and also help search for properties within your budget. You can apply for it either through phone or calling one of the high Street lender’s.

It is usually free and some lender’s can give them within few minutes and it is usually valid between 30 and 90 days. To apply, you need to provide your personal details such as your full name, date of birth, address, information about your income, and your expenditure and existing credit agreements. They use these information to conclude on the mount they would state that they would be willing to lend you on principle, and will state that in writing. There won’t be need for your payslips when you are applying for mortgage in principle but they will be required when you are applying for mortgage. The lender usually asks for permission to run a credit check when one applies for a mortgage in principle. You need to enquire from them if it is a hard or soft credit check. The difference lies in the fact that a hard credit check leaves a footprint on your credit record that other lenders will see and it might affect your credit rating in future while a soft credit checkdoes not leave traces that other lenders can see.

You have to not the following important points

Mortgage in principle is not a mortgage offer

It is not a guarantee that you can borrow a certain amount

It is not a commitment that you can take a mortgage from a particular lender,

It is not linked to any particularproperty

It can be declined.

There are several reasons why it can be declined and they include the following

Having a poor credit history that can be caused by missed payments, County court judgement, not being on the electoral register, not fitting in on the lender’s demographics, andthe lender having concerns about your debts. However, that doesn’t mean you cannot be granted a mortgage by another lender. Talk to an independent mortgage broker and receive advice on the best way to tackle it.

Mortgage in principle differs from mortgage offer on that the later is an official confirmation from a lender stating that he will give you a mortgage for a specified property while mortgage in principle isn’t linked to a particular property. You can only receive a mortgage offer after you gave submitted mortgage application and fine through the whole application process that enables the lender to carry out a valuation on the property.

To receive an agreement in principle, you need the following: verification of your identity, salary, and spending. You need to submit your proof of income (payslips within 3 months), proof of address within the last three months, proof of identity ( passport or driver’s license), self-employed account, proof of deposit (statement of account or letter from a relative if it is a gifted deposit), credit report ( can be from Equifax, call credit or Experian), new property details showing property type or address, Estate agent details including name, address and phone number, and solicitor’s details including the name, address and phone number.

Providing these documents and details makes your application easier and you can easily get approved.


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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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