Agreement in Principle: How Long Does It Last?
When seeking a mortgage, one important step in the process is obtaining an “agreement in principle” (AIP). This is a document that provides an estimate of how much a lender may be willing to lend you, based on certain information about your income, expenses, and credit history. But how long does an agreement in principle last, and what happens if you don`t use it right away?
First, it`s important to understand that an AIP is not a formal mortgage offer. It`s simply an indication of how much you may be able to borrow, subject to further checks and information being provided. An AIP typically lasts around 30-90 days, depending on the lender, and may be renewed or extended if necessary. However, it`s important to note that an AIP is not a guarantee that you will be offered a mortgage, or that the terms and conditions will be the same as those indicated in the AIP.
If you don`t use your AIP within the specified time frame, it may no longer be valid, and you would need to apply for a new one if you still want to seek a mortgage. Additionally, if your circumstances have changed since you received your AIP (e.g. you`ve changed jobs, had a pay cut, or incurred new debts), the lender may need to reassess your application and issue a new AIP or formal mortgage offer.
It`s also worth noting that an AIP does not guarantee that you will be approved for a mortgage, or that you will be able to borrow the amount indicated in the AIP. The lender will still need to conduct detailed checks, including a credit check and an affordability assessment, before making a final decision.
So, in summary, an agreement in principle typically lasts for 30-90 days, depending on the lender, and may be renewed or extended if necessary. However, it`s important to remember that an AIP is not a formal mortgage offer, and may not guarantee that you will be approved for a mortgage or that the terms and conditions will be the same as those indicated in the AIP. If you don`t use your AIP within the time frame specified, you may need to apply for a new one, and if your circumstances have changed, the lender may need to reassess your application. As always, it`s best to seek advice from a professional mortgage broker or advisor before making any decisions.