Mortgage Agreement in Principle Shared Ownership

Mortgage Agreement in Principle: Understanding Shared Ownership

If you`re considering purchasing a home through a shared ownership scheme, you`ll need to understand the mortgage agreement in principle process. A mortgage agreement in principle (AIP), also known as a decision in principle or a mortgage promise, is a statement from a lender indicating how much they`re willing to lend you. An AIP is based on your credit score and financial status, and is not a guarantee that you`ll be approved for a mortgage.

Shared ownership is a popular way for first-time buyers to step onto the property ladder. Under a shared ownership scheme, you`ll only purchase a portion of the property and pay rent on the rest. This is a great option for those who can`t afford to purchase a home outright, but want to gradually increase their share until they own the property outright. Shared ownership properties are usually managed by housing associations.

To secure a mortgage on a shared ownership property, you`ll need to go through the AIP process. The lender will assess your creditworthiness and financial status, and give you an indication of how much they`re willing to lend you. It`s important to remember that the AIP is not a guarantee of approval, but it`s a good indication of what you can afford.

When applying for an AIP, you`ll need to provide proof of your income, employment status, and any existing debt. The lender will also assess your credit score and credit history. Once you`ve been approved for an AIP, you`ll know how much you can borrow and can start looking for a shared ownership property that`s within your price range.

It`s important to note that the AIP is usually only valid for a limited time (usually around 30-90 days). If you don`t find a property within this time frame, you`ll need to reapply for an AIP. Additionally, if your financial circumstances change (e.g. you lose your job or take on more debt), your AIP may no longer be valid.

In conclusion, a mortgage agreement in principle is an important step in securing a shared ownership property. It`s important to understand that an AIP is not a guarantee of approval, but it`s a good indication of how much you can afford. When applying for an AIP, make sure you have all the necessary documentation and be prepared to act quickly once you find a property within your price range.