5 Key Points when applying for an Agreement in Principle
Matt Poole ??
Mortgage Expert for Business Owners | Simplified, Fast-Track Solutions Using Your Business Profits - Not Your Personal Income!
When looking to apply for a mortgage you want to make sure you get things right first time. Providing a lender with incorrect information can have a nasty knock on effect further down the line.
In this article I will give you the 5 KEY areas when applying for a mortgage to give yourself the highest possible chance of success.
Firstly an Agreement in Principle is the first hurdle when applying for a mortgage. This is where you provide the lender with your information and they will make an initial check to see if they are prepared to lend.
At this point a credit check WILL be done, some lenders will carry out a soft credit search, others will carry out a hard credit search - ASK the lender before you apply which one they do.
Onto the 5 KEY areas:
- Personal Details: This section is all about you:
- Your name
- Date of Birth
- Address history (you will need a 3 year history)
- Number of dependants
Really simple stuff, double check you enter dates correctly and have not mis-typed anything.
2. Basic details of the mortgage you are looking to take:
- The amount you are looking to borrow
- The property value
- The term you are looking to take the mortgage over
3. Income - This can be where things get a little bit tricky. If you are in an employed position then you're basic salary will be taken into account. On top of this lenders will take overtime, bonuses, commission etc. Usually a 3 month average on your latest 3 monthly payslips.
If you are a Limited Company Director then most lenders will take your salary and dividends that have been paid. Lenders will typically look at the latest 2 years tax returns and take an average.
Other lenders may take your salary and net profit of your business if you are a Limited Company Director. Again by taking a 2 year average.
Getting your income 100% accurate is absolutely key to the application. If you get this wrong it can have massive consequences further down the line when making your full application. It can be the difference between lending what you need and being left short.
4. Outgoings and Commitments:
- Lenders will want to know what you financial commitments are. This will be the type of finance, the monthly payment and the current balance.
- The easiest way to do this is to download your credit file from Money Saving Expert Credit Club and matching up the details on your report with the application.
- Anything missed off here can again have an impact on what you can lend.
- Other commitments to declare that WILL NOT show on your credit file include student loan payments and any childcare costs that you have.
5. Credit History
- Lenders will ask if you have had any credit issues in the past. This includes missed payments, defaults and County Court Judgements (CCJ's)
- These will clearly show on your credit file so if you have any of these mke sure you declare them. DO NOT try and hide them the lender will always find out!
Make sure you get these areas 100% accurate to ensure you give yourself the best possible chance of being accepted. Anything incorrect can cause a decline and also a potential hard footprint on your credit file.
If you would like to hear in more detail please watch my video below and look out for more finance tips in #MortgageMonday
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