Agreement in Principle Self-Employed

What information do self-employed borrowers need to provide when applying for an Agreement in Principle?

Again, it comes back to those income and affordability assessments. We want people to be as clear as possible with us, and provide as much paperwork as possible, when we apply for that Agreement in Principle. This allows us to submit top-quality information. If we get that part right, the resulting decisions are typically very reliable.

How reliable is an Agreement in Principle? How long is an Agreement in Principle valid if I’m self-employed and my income changes?

To answer the first part of the question, an Agreement in Principle is very reliable as long as we’ve input accurate information in the first instance. It’s important we have comprehensive and correct information.

After your information is in the system, a mortgage offer is almost guaranteed.

The only exceptions would be if we’re unable to verify your income (which we would have clarified upfront), prove your ID or address (which is rarely an issue), or if undisclosed information comes to light.

As long as we have the right information at the very outset, there’s no reason why, once you go to a full application, you wouldn’t get a mortgage offer.

The validity of an Agreement in Principle, particularly regarding income changes, is dependent on the specific information that has been altered. Typically, they vary in validity from 30 to 90 days. However, once you go from an AIP to a full application, you will be required to provide proof of your income.

If your income has changed in that intervening period, tell us at the point before we make a full application so we can amend the Agreement in Principle. We need to make sure the new information is taken into account and consider if that original decision is still valid.

Quite simply, if your income has gone down, there’s a possibility you’ll be able to borrow a bit less. And if your income has gone up, you might be able to borrow a little bit more.

Will I need a credit check? Does a Decision in Principle affect a credit score?

The short answer is yes – you will need a credit check. All Agreements in Principle (as it is otherwise known as) involve some form of credit check. Does an Agreement in Principle affect your credit score? The answer is yes and no.

Typically, most credit scores these days are what’s called a ‘soft check’. This won’t typically have any adverse impact on your credit rating or your credit file. A hard check, however, might have an impact.

One or two credit checks won’t make a huge impact, but we still consider it good practice to have as few credit checks as possible, particularly when it comes to a hard check – because an excessive number of hard checks will, at some point, harm that credit score.

As we discussed earlier, if we have all the necessary information and it’s of high-quality, the likelihood of us needing to do repeat credit checks is quite low. I can’t overstate how important that preparation stage is. The better the quality of information upfront, the more reliable things are going to be further in the process.

How do I apply for an Agreement in Principle if I’m self-employed? How long does this take?

Talk to us – in person or on the phone – and we will get that Agreement in Principle done for you. It doesn’t take very long at all, and the decisions we get back are often instantaneous – either a ‘pass’ or a ‘decline.’ If it’s a decline, we usually receive reasons, such as insufficient lending capacity or a credit file issue, which we can then discuss with you.

How long it takes to get an Agreement in Principle is entirely down to the individual and how quickly they can get information to us. Naturally, we don’t want to sit on anything longer than we have to, so the sooner you get that information to us, the sooner we’ll get that decision.

Is there anything else we need to know here, or anything else you’d like to add?

Preparation is key – I can’t stress that message enough. Get your paperwork in place and send it over to us, and we’ll make sure it gets assessed properly for you.

We are as close as it gets to being experts, and we’re here to help. We’re here to make reliable, good decisions and allow people to be able to move on and hopefully buy their dream home.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.