This interview with Marc Elliott de Lama, Owner of Fluent Finance Abroad, discusses the concept of Agreement In Principle (AIP) in Spain. AIP is offered by banks in the UK as a piece of paper that is not worth much but gives assurance that the customer will get a mortgage based on the information provided. In Spain, there is a similar concept called “simulacion,” but it is not worth anything. The only way to get a firm mortgage offer is by applying to the bank and having the risk department assess the case and documentation. AIPs are pretty much worthless until the application is physically submitted to the bank. The value of AIP is only limited to the person giving it. It is essential to take this seriously because people start making offers on properties thinking they have the money, but they don’t.
Marc warns that it is essential that agents and buyers understand this because he sees people making offers on properties thinking they have the money when they don’t.