Approval in Principle (AIP) will tell you how much money you have to buy a house with. It is an assurance, that you have the money to buy a house once you see one you are satisfied with. It can greatly ease the process of securing a housing loan, and buying a house you’re interested in once you find it.
Having an AIP will help you develop a functional budget, and save time because you can concentrate on looking at homes within your price range. Knowing how much the bank will extend to you vis-à-vis your savings will help you plan for any amount that you have to spare after you have acquired a home. For instance, if the bank gives you a housing loan less $ 20,000, and you’ve saved $30,000, you can safely invest $10,000.
How do you get an AIP?
Getting an AIP may be painstaking, but the alternative is far much worse. When you know what to expect however, you can save lots of time. The following is a generalized procedure for applying for and getting your AIP:
Step 1: Decide on who you’d like your financier to be for your housing loan. This should be the lender who offers the most competitive rates in the market, all factors considered. There are online sites that can assist you to make this decision. Once you have zeroed in on a bank, you may contact it through the comparison site page.
Step 2: You will then be contacted by a Mortgage Specialist working for the bank in question, who will furnish you with the AIP application form and a list of documents you need to show to the bank. Hand in the duly filled form together with the documents required and wait for a response.
Step 3: The bank will go through your application and documents and analyze your creditworthiness. Once it has approved, you will get your AIP stipulating the amount the bank is willing to lend to you come the time, and for how long the AIP remains valid. You may use it to purchase property within the given period of time.
Worth noting is that while the maximum loan amount differs between lenders, it is a good estimate of what you can afford in most banks. Therefore, even after you have an AIP, you can still change the bank you wish to get your housing loan from. However, the process is much smoother when you apply for a loan from the same bank.
Many people wonder what difference there is between moneylenders and banks, since it appears that they all operate in a similar way. The following are the major differences between the two institutions.
- Unlike banks, you can get a small loan from a In fact, most moneylenders focus on small loans. You may come across lenders who will not lend amounts above $ 1500 at a time.
- Getting loans from moneylenders takes a shorter time than from banks. Some moneylenders can have your loan approved within an hour if you have all the right documentation ready when you make your application.
- Moneylenders are often smaller than local banks. They are therefore more flexible when it comes to meeting customer requirements.
- Moneylenders are more forgiving of poor credit histories than banks. You may be able to get a loan even with a bad credit history. However, having a significant debt may prevent you from securing a loan even from the most forgiving