Is Mortgage Promise the Same as Agreement in Principle

If you`re in the market for a mortgage, you may have heard of two terms that can be a bit confusing: mortgage promise and agreement in principle. Both of these terms refer to a type of pre-approval that a lender can offer you, but there are some key differences between the two.

First, let`s define what each of these terms means. A mortgage promise is a type of pre-approval that is often given by estate agents and mortgage brokers. Essentially, it`s a promise from a lender that they will provide you with a mortgage for a certain amount if you meet their criteria. This can be a helpful tool when you`re looking for a home, as it can give you an idea of what you can afford and allow you to put in an offer on a property with more confidence.

On the other hand, an agreement in principle (AIP) is a type of pre-approval that is given directly by a lender. You`ll need to provide some basic information about yourself, such as your income and credit score, and the lender will use this to determine whether they would be willing to lend to you and how much you could potentially borrow. This is a more formal process than a mortgage promise, as it involves a credit check and may require you to provide more detailed financial information.

So, is a mortgage promise the same as an agreement in principle? The short answer is no. While both of these types of pre-approval can be helpful when you`re looking for a home, there are some key differences to be aware of.

One of the main differences is that a mortgage promise is not always a guarantee that you will be approved for a mortgage. It`s simply a promise from a lender that they will consider lending to you if you meet their criteria. An agreement in principle, on the other hand, is a more concrete indication that a lender would be willing to lend to you.

Another difference is that a mortgage promise is typically given by estate agents or brokers, whereas an agreement in principle comes directly from a lender. This can make a difference in terms of the level of detail and information that is required.

Finally, it`s worth noting that some lenders may not offer both a mortgage promise and an agreement in principle. Some may only offer one or the other, so it`s important to clarify with your lender what type of pre-approval they are offering you.

In conclusion, a mortgage promise and an agreement in principle are two types of pre-approval that can be helpful when you`re looking for a home. However, they are not the same thing and there are some important differences to be aware of. If you`re unsure about which type of pre-approval to pursue, it may be worth speaking to a mortgage advisor for guidance.