When you`re in the market for a new home, it`s important to know what you can afford before you start shopping. This is where an agreement in principle comes in. Also known as a mortgage in principle, it`s a conditional approval from a lender that tells you how much they`re willing to lend you for your new home purchase.
But before you can get an agreement in principle, there`s some information you`ll need to gather. Here`s what you need to know:
1. Your income: Lenders will want to see proof of your income, including payslips and bank statements. They`ll also want to know if you have any other sources of income, such as rental income or investments.
2. Your outgoings: Lenders will want to know how much you`re spending each month on things like bills, food, and other living expenses. They`ll also want to know if you have any other debts, such as credit cards or loans.
3. Your credit score: Your credit score is an important factor in determining whether or not you`ll be approved for a mortgage. Lenders will want to see a good credit history, so it`s a good idea to check your credit score before you apply.
4. The property you`re interested in: You`ll need to know the details of the property you`re interested in, including the address and the asking price. Lenders will also want to know if there are any issues with the property, such as if it`s on a flood plain.
5. Your deposit: You`ll need to have a deposit saved up to put down on your new home. Lenders will want to know how much you have saved, as this will affect how much they`re willing to lend you.
By gathering this information, you`ll be able to provide a lender with all the information they need to give you an agreement in principle. This can be a useful tool when you`re out shopping for a new home, as it can give you an idea of what you can afford and help you narrow down your search.