Declined Agreement in Principle
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Declined Agreement in Principle
Can an Agreement in Principle be declined? What happens if my Agreement in Principle has been declined?
An Agreement in Principle certainly can be declined. If that happens, you would really want your advisor to get an understanding as to why. From there, we can make a recommendation of what to do next.
Usually we’ll get some steer as to the problem. Just because you’ve been declined with one lender, it doesn’t mean to say you’ll be declined with another one – but it does depend on the circumstances.
We would definitely be trying to get an understanding to help direct us for the next steps.
Why has my Agreement in Principle been declined?
The main reason you might have a Decision in Principle declined is relating to credit score. That works behind the scenes, giving the lender an idea of how you are at managing credit.
If you’ve had any missed payments, entered into a trust deed, a bankruptcy or anything like that, it can cause problems. A lender may not be prepared to lend to you.
We also see issues around addresses. If you’ve recently moved house, you’ve moved around a lot or you’re not on the electoral roll at your current address, that can cause problems.
It might just be that your circumstances are not suitable for that particular lender. There might be something that they don’t particularly like. That’s where an advisor is really beneficial because we can help you work out what the issue is and if other lenders would be more inclined to say yes.
Can a rejected Agreement in Principle affect your credit score?
Generally, getting a Decision in Principle runs a credit check on you. If you’re somebody who follows their credit score through one of the portals, you might see that score reduce after a Decision in Principle has been carried out, whether it’s been rejected or not.
It will usually bounce back after a couple of weeks. That’s nothing to worry about, and won’t impact your chances of getting a mortgage. You should just avoid having too many searches done at any one time.
If we really needed to, we might apply for up to maybe three Decisions in Principle at any one time. At that point, we would really understand what the problem was and wouldn’t go much further than that. What you don’t want is to keep applying for Agreements in Principle. That will ultimately cause you a bit of an issue.
Can Agreements in Principle be changed?
Potentially, yes. For example, sometimes we see Decisions in Principle be declined because we haven’t declared a credit commitment.
People can forget to mention something to us, particularly if it’s borrowing on interest-free credit. Sometimes it could be shopping credit facilities like Klarna which people don’t really perceive as a credit commitment. If we haven’t declared it, sometimes we’ll be declined because of that.
If we then realise the error, we can go in and make that change. It gives us useful information and we can potentially go back, but it does depend on the issue and it also depends on the lender.
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Can a mortgage be declined after an Agreement in Principle?
Sadly, yes. A Decision in Principle just states that in theory a lender will lend to this client. We can’t go for a full mortgage application until you’ve actually had an offer accepted on a property.
Your mortgage application is based partly on you as an individual, your affordability and your creditworthiness, but it’s also based on the property as security for a mortgage.
In Scotland, we have the Home Report system, and we usually know if the property is going to be acceptable. But when we go for that full mortgage application, they start verifying the information we’ve given. They’ll want to see ID, proof of income, bank statements, etc.
Sometimes people might be paid in a way that isn’t straightforward that wasn’t explained properly at the start, which can cause problems. The property itself occasionally might cause decline, depending on the circumstances.
Activity on your bank account that the lender doesn’t like might cause a problem at full application. So yes, it is possible for your mortgage application to be declined after the Decision in Principle.
How many times can you apply for an Agreement in Principle then? Is there a limit?
Technically, there’s not a limit, but it wouldn’t serve you well to apply constantly. There shouldn’t ever really be a need for that. As I say, an advisor can really help guide you through applying, including when and how many times. But there isn’t a limit.
How long does it take to get an Agreement in Principle approved?
Sometimes we can have it back in 20 minutes – it doesn’t take very much time at all. If there’s something a bit more complicated on the application, we might hear that it has been referred for somebody at the lender to physically look at. If that happens, they tend to have a turnaround time of 24 to 48 hours. So generally speaking, it doesn’t take too long.
How can I better my chances of getting my Agreement in Principle approved?
An important thing is to look after your credit profile. It’s worth monitoring that and making sure everything’s accurate and nothing has come up you’re not aware of. Make sure that your address is updated with everybody. If you move, make sure your bank statements, any credit facilities and driver’s licences are all updated.
You definitely want to be on the electoral roll at your current address, bearing in mind that that can take quite a few months before it shows to the lender. So if you’re moving, it’s a good idea to start that process very quickly.
What else do we need to know about declined Agreements in Principle?
If you are having any difficulty with an Agreement in Principle, or you think there might be something slightly unusual in your circumstances, an advisor can really help. We can look at your circumstances before we start the process of applying for an Agreement in Principle, and usually we’ll have a good idea of which lender to start with.
We might be able to exclude certain lenders because we know that they wouldn’t be okay with specific issues, which means that you’re much more likely to get a positive outcome quickly.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
Useful Links
- First Time Buyers
- Agreement in Principle
- Declined Agreement in Principle
- First Time Buyer Joint Mortgages
- First Time Buyer New Build Mortgage
- Self Employed Mortgage First Time Buyer
- 5 Percent Deposit Mortgage Scotland
- Shared Ownership Mortgage Scotland
- Joint Borrower Sole Proprietor
- Guarantor Mortgage Scotland
- Gifted Deposit Mortgage
- Offers Over Home Report
- Mortgage Guarantee Scheme Scotland
