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Why You Still Need A Mortgage Broker Even If You Have A Mortgage In Principle

MORTGAGES | 14.12.2018

Getting an Agreement in Principle from a mortgage lender can be an exciting step on your route to buying your own home and many people assume that once they’ve got this agreement in their hands, they’re guaranteed to secure the home of their dreams.

Getting an Agreement in Principle from a mortgage lender can be an exciting step on your route to buying your own home and many people assume that once they’ve got this agreement in their hands, they’re guaranteed to secure the home of their dreams.

It’s an unfortunate reality that an Agreement in Principle doesn’t actually guarantee anything. Instead, it simply provides you with the indication that, providing your personal and financial circumstances don’t change by the time you’re officially ready to buy, the lender in question will probably agree to your loan application.

Why did the lender reject my application after giving me an Agreement in Principle?

Often, post-AIP applications are rejected due to a change in financial circumstances.

For example, your application may be refused for one of the following reasons.

Changes in income

One of the most common reasons for a rejected application is a change in income. If you’ve lost your job, moved to a different company or you’ve become self-employed, the lender may withdraw their initial Agreement in Principle and refuse to lend you the money you need.

In some cases, they may reduce the amount they’re willing to lend, forcing you to either find the money to make up the difference or abandon the property purchase completely.

Taking out a new line of credit

When the lender offered you an Agreement in Principle, it’s unlikely that they had a close look at your credit history. Usually, it’s only when you’re ready to go ahead with the full application that they delve a little deeper and look at your track record with debt.

If they find that you’ve got a bad credit history or you’ve taken out a new line of credit since you obtained the Agreement in Principle, they may reject you.

Missed payments

Even if your credit history has been healthy up until this point, if you’ve missed payments shortly before formally submitting an application, this may raise doubts in the lender’s mind as to whether you can afford the payments.

It may come as a surprise but you can still be declined even if your circumstances are the same as when you obtained the Agreement in Principle.

How a mortgage broker can help

When looking for a mortgage, a mortgage broker can be incredibly invaluable. They’ll compare dozens of deals on your behalf before highlighting the most suitable ones for you and pointing you in the direction of the lenders most likely to approve your application.

A mortgage broker can also help you if you obtained your initial Agreement in Principle from somewhere else. If your mortgage application has been rejected, your broker will assess the market and do everything they can to reduce the likelihood you’re turned down again.

To find out how TaylorMade can help you, please get in touch with our team today.

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