Securing an agreement in principle is one of the most important steps in the home buying and mortgage process. This guide outlines the key steps involved in securing an agreement in principle with Nationwide Building Society. Nationwide offers a fairly unique agreement in principle proposition.
What is an agreement in principle?
An agreement in principle, also known as a mortgage in principle or decision in principle, is a preliminary assessment from a lender indicating the amount they would be willing to lend to a potential borrower.
It is based on a basic evaluation of the borrower’s financial situation and creditworthiness. While not a binding agreement, it helps homebuyers understand their borrowing capacity and can assist in the initial stages of house hunting.
What are the benefits of securing an agreement in principle?
Securing an agreement in principle offers several benefits:
- Clear understanding of borrowing capacity: It provides a realistic estimate of the amount a lender is willing to lend, helping homebuyers understand their budget and focus their search on affordable properties.
- Increased confidence in making offers: Having an agreement in principle demonstrates to sellers that the buyer is serious and financially capable, potentially giving them an advantage over other buyers without such an agreement.
- Streamlined process: Having an agreement in principle can expedite the mortgage application process since some of the initial checks and assessments have already been completed.
- Reduced risk of disappointment: By assessing affordability upfront, there is less chance of being declined for a mortgage later in the process, reducing the risk of disappointment and wasted effort.
- Negotiating power: Buyers with an agreement in principle may have stronger negotiating power as they can confidently make offers and proceed with transactions, increasing the chances of securing a favourable deal.
Why Choose Nationwide for Your Mortgage in Principle?
Nationwide offers unique benefits when it comes to securing an agreement in principle:
Rate Lock
Unlike many other lenders, Nationwide allows you to lock in an interest rate and secure an agreement in principle. This means you can reserve a rate for up to 90 days. If interest rates increase during this period, you can take advantage of the rate you reserved. However, if rates decrease, you have the flexibility to choose a lower rate.
Affordability Lock
Nationwide also offers an affordability lock. This means that once you’ve applied and secured an agreement in principle, any changes in affordability or criteria won’t affect the terms you’ve been approved for. This provides stability and assurance during the home-buying process.
Both the rate lock and affordability lock benefits offered by Nationwide are relatively unique in the market. These features provide borrowers with more control and flexibility, allowing them to make informed decisions while taking advantage of favourable interest rates and preserving their affordability.
What documents do you need for a Nationwide AIP?
To obtain an Agreement in Principle (AIP) from Nationwide, you will typically need to provide the following documents:
- Proof of ID: This can be a valid passport or driver’s license.
- Proof of Address: Documents such as utility bills, bank statements, or a recent council tax bill that clearly show your current address.
- Proof of Income: If you are employed, you will usually need to submit three months’ payslips as proof of income. For self-employed individuals, Nationwide typically requires either two years of accounts or SA302 forms from HM Revenue and Customs as evidence of income.
- Bank Statements: Nationwide may request your latest one month’s bank statements to assess your financial situation and expenditure.
How long is a Nationwide AIP valid for?
A Nationwide Agreement in Principle (AIP) typically lasts for three months. During this period, you have the option to reserve a specific interest rate. However, it’s important to note that the mortgage offer must be issued within these three months in order to secure the reserved rate.
If the mortgage offer is not issued within the specified timeframe, the reserved rate may expire, and you may need to reapply or choose a different rate based on the prevailing market conditions at that time.
Does an agreement in principle, guarantee success with your mortgage application?
No, an agreement in principle, does not guarantee success with your mortgage application. While it is a positive indication from a lender that they are willing to lend you a certain amount based on a basic assessment, it is still subject to further checks and underwriting during the full mortgage application process.
The lender will conduct a more detailed review of your financial situation, credit history, property valuation, and other factors before making a final decision on approving the mortgage. Therefore, while an agreement in principle is a helpful step, it does not guarantee final approval for your mortgage application.
How long does it take to get a Nationwide AIP?
Once the broker has your documents, obtaining a Nationwide Agreement in Principle (AIP) is a relatively quick process. It typically takes 12-20 minutes to input the necessary information for the AIP. After that, you will usually receive an instant decision. In some cases, if the decision requires further review, it may take up to 24 hours to receive a response.
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Whether you’ve just had an offer accepted on a property and you’re ready to go, or you’re simply wondering how much you need to save for a deposit, it’s never too soon to reach out.
What happens after you’ve secured an agreement in principle?
Once you have obtained an Agreement in Principle (AIP), the next step is to search for a property. Once your offer on a property is accepted, it’s advisable to reassess the current mortgage rates before proceeding with the full mortgage application.
If you have reserved a rate with Nationwide, you may have the option to stick with the original product you reserved, or choose a new one if the reserved rate has expired or a better rate is available at that time. After deciding on the mortgage product, you can then proceed with the full mortgage application process, which includes providing detailed documentation and completing the necessary paperwork.
How long does it take Nationwide to approve a mortgage?
The duration of a Nationwide mortgage application can vary depending on individual circumstances and the workload of the lender. However, as a general estimate, it typically takes around 10 days to 2 weeks from the time of application to receiving a mortgage offer from Nationwide.
It’s important to note that this timeframe can be influenced by factors such as the complexity of the application, the responsiveness of all parties involved, and any additional documentation or information required during the underwriting process.
What is the Nationwide Helping Hand Mortgage?
The Nationwide Helping Hand Mortgage is designed to assist first-time buyers. With this mortgage, borrowers can potentially borrow up to 5.5 times their income. The requirements for this mortgage product include selecting a 5 or 10-year fixed-rate term and having a minimum deposit of 5%. Additionally, self-employed individuals are not eligible, and borrowers must meet the minimum income requirements set by Nationwide.
What products do Nationwide offer?
Nationwide Building Society offers a wide range of mortgage products to cater to different needs:
Fixed-rate mortgages
These mortgages provide a fixed interest rate for a specific period, typically ranging from 2 to 10 years. This offers stability and predictable monthly repayments during the fixed term.
Tracker mortgages
Nationwide also offers tracker mortgages where the interest rate tracks a specified benchmark, typically the Bank of England base rate. This means that the interest rate can change in line with fluctuations in the benchmark rate.
Repayment mortgages
Nationwide provides repayment mortgages, where the monthly payments consist of both principal and interest, gradually paying off the loan over the mortgage term.
Interest-only mortgages
Nationwide may offer interest-only mortgages, where borrowers only pay the interest on the loan during the term. However, a suitable repayment vehicle must be in place to repay the loan at the end of the term.
Buy-to-let mortgages
Nationwide offers buy-to-let mortgages through its subsidiary, The Mortgage Works. These mortgages are specifically designed for purchasing or remortgaging properties to be rented out to tenants.
For more information on Nationwide mortgage offerings, please contact a member of the Strive team, by emailing info@strivemortgages.co.uk or call us on 01273 002697.
