First-Time Buyers: Getting a Mortgage Agreement in Principle
When you’re a first-time buyer, you will need to get a mortgage Agreement in Principle to buy your new home. At Warwickshire Mortgages, we regularly help families living in rented homes to take their first step on the property ladder. In this guide, we look at what you need to know about getting an Agreement in Principle (AIP) and how to improve your credit score.
What is the Agreement in Principle for first-time buyers?
A mortgage Agreement in Principle enables you to make a serious offer on a property. Estate agents will usually ask if you have this in place before they share your offer with the seller. Without an Agreement in Principle, there’s a risk that your offer will be rejected.
Before agreeing to a mortgage, lenders need to check whether you can afford to buy your chosen property. They will assess whether you have the ability to make your monthly mortgage repayments. The lender will carry out a series of affordability checks, looking at your income, debts and credit score.
Once the lender is happy that you can afford to borrow towards the purchase of your new home, they will offer you the Agreement in Principle. Also known as a Decision in Principle, this indicates what the lender is prepared to loan you in terms of a potential mortgage.
What will I need to get a Mortgage Agreement in Principle?
Every lender has slightly different criteria, but as a general guide, they will ask you about your earnings and expenses. They will usually ask where you’ve lived for the past 3 years also.
Lenders will ask you to prove your annual income, so you will need to provide your payslips. If you’re self-employed, you will need to show proof of earnings for at least two years. The lender will ask you how much you owe, such as credit card debts or loans. They may also ask about pension contributions and if you have any dependants, e.g. children or others that rely on your income.
How do you get a good credit score?
A good credit score will help you get an Agreement in Principle and it could give you broader mortgage options. If you’re planning to buy your first home, there are things you can do to help improve your credit score. Check that you’re registered on your local electoral roll, pay your rent and household bills on time. Keep credit card balances below 30% of the total limit.
For more insights, see our guide, Buying your first home in Coventry and Warwickshire.
Find mortgages for first-time buyers
Before you book any house viewings, start by getting trusted mortgage advice from our team. At Warwickshire Mortgages, we believe that buying your first home should be a celebration and not a headache, and we’re here to answer your questions.
Are you a family looking to buy your first home? Book a free, no-obligation chat with our expert team.