When it comes to buying a home, getting a mortgage is often a crucial part of the process. But before you start house hunting, it’s a good idea to have an agreement in principle in place. This is a document that confirms how much a lender may be willing to lend you based on your income and credit score. It’s not a guarantee of a mortgage, but it can help you when it comes to making an offer on a property.
Traditionally, getting an agreement in principle involved a hard credit search, which leaves a ‘footprint’ on your credit report. If you have too many footprints, it can make it harder to get credit in the future. But now, many lenders offer a soft search option for mortgage agreements in principle. So, what is a soft search and why is it a good thing?
Soft searches are a type of credit check that won’t be visible to other lenders, so it won’t harm your credit score. They’re often used by lenders to check your eligibility for credit products, such as credit cards or loans. A soft search won’t tell the lender everything they need to know about your credit history, but it will give them a good idea of whether you’re likely to be approved for a product.
With mortgage agreements in principle, using a soft search can be a useful tool. It means that you can get an idea of how much you may be able to borrow without harming your credit score. This can be especially helpful if you’re just starting to think about buying a home and you want to get an idea of what you can afford.
Another benefit of using a soft search for mortgage agreements in principle is that it can be a faster process. With a hard search, the lender will need to carry out a full credit check, which can take longer. But with a soft search, they can get an idea of your creditworthiness quickly, which means you could have an agreement in principle in a matter of hours.
Of course, there are some downsides to using a soft search for mortgage agreements in principle. The lender won’t have as much information about your credit history, so they may not be able to offer you the best rates. Also, if you go ahead and apply for a mortgage with a lender who used a soft search, they may still carry out a hard search when you make a full mortgage application.
Overall, using a soft search for a mortgage agreement in principle can be a useful tool, especially if you’re just starting to think about buying a home. It can help you get an idea of what you can afford and it won’t harm your credit score. Just be aware that it may not give you the full picture of your creditworthiness and you may still need to undergo a hard credit check when you apply for a mortgage.