Contractor Mortgage Agreement in Principle

07 May Contractor Mortgage Agreement in Principle

Contractor Mortgage Agreement in Principle: What You Need to Know

As a contractor, getting a mortgage can often be more challenging than it is for those who are in full-time employment. However, with the right preparation and understanding of the process, it is possible to secure a mortgage that meets your needs. One important step towards this is obtaining a contractor mortgage agreement in principle (AIP).

What is a Contractor Mortgage Agreement in Principle?

AIP is essentially a statement from a mortgage lender that indicates they are willing to lend you a certain amount of money based on the information you have provided. It is not a guarantee of a mortgage, but it can be helpful in giving you an idea of what you can realistically afford when house hunting.

Why is an AIP Important for Contractors?

Contractors often have an irregular income, which can make it more difficult for lenders to assess their affordability. An AIP gives you some level of reassurance that you are able to secure a mortgage and can help to speed up the application process. It also shows estate agents and sellers that you are a serious buyer who has taken the necessary steps to secure financing.

What Information Is Required for an AIP?

To obtain an AIP, you will need to provide information about your income, employment history, and credit history. As a contractor, you will typically need to provide evidence of your income over the previous year or more, such as tax returns, invoices, or contracts with clients. You may also need to provide evidence of your ongoing contracts and any future work you have lined up.

How to Obtain an AIP as a Contractor

There are a few different routes you can take to obtain an AIP, depending on your circumstances. You can approach a traditional mortgage lender or a specialist contractor mortgage broker who understands the unique challenges of obtaining a mortgage as a contractor. Alternatively, you could use an online mortgage calculator to get an idea of what you might be able to afford and then approach lenders directly to request an AIP.

Final Thoughts

Getting a contractor mortgage agreement in principle is an essential step in the mortgage application process for contractors. It can give you an idea of what you can afford and show sellers and estate agents that you are a serious buyer. By providing the necessary information and choosing the right approach, you can secure an AIP and take a step closer to owning your dream home.