When it comes to determining the mortgage amount you qualify for, one of the early stages in the process is obtaining an Agreement in Principle (AIP). An AIP is essentially a preliminary decision from a lender stating the amount they would be willing to lend to you based on your income, expenses, and credit score. It`s an essential part of the home buying process, but how long does an AIP last?
The duration of an AIP can vary depending on the lender. Most lenders will offer an AIP that lasts anywhere from 30-90 days. This means that if you don`t make an offer on a property within the given timeframe, your AIP will expire, and you`ll need to reapply. However, it`s important to note that some lenders may provide an AIP that lasts for a more extended period, potentially up to six months.
But why do AIPs have expiration dates in the first place? Well, your financial circumstances can change, and the lender needs to re-evaluate your situation before offering you a loan. For example, if you`ve lost your job or taken on additional debt, your eligibility for a mortgage may be impacted. Additionally, interest rates on mortgages can change over time, which can also affect the amount you`re eligible to borrow. Therefore, it`s important to keep your lender updated on any changes in your financial situation.
If your AIP does expire, don`t worry – you can simply reapply. However, keep in mind that each application will typically require a credit check, which may impact your credit score. To avoid this, try to limit the number of applications you make and only apply for an AIP when you`re ready to start seriously looking for a property.
To summarise, an AIP is a preliminary decision from a lender stating the amount they would be willing to lend to you based on your financial circumstances. The duration of an AIP can vary depending on the lender, but most last between 30-90 days. If your AIP does expire, you can simply reapply, but be aware that each application will typically require a credit check. Keeping your lender updated on any changes in your financial circumstances can help ensure that you`re offered the best possible mortgage deal.