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  • FIRST POST
    • mhoc
    • By mhoc 2nd Oct 17, 9:11 AM
    • 16,075Posts
    • 199,679Thanks
    mhoc
    can a "mortgage in principle" become in valid?
    • #1
    • 2nd Oct 17, 9:11 AM
    can a "mortgage in principle" become in valid? 2nd Oct 17 at 9:11 AM
    My son is back home and saving for his house deposit. He is thinking of getting a "mortgage in principle" before he starts any serious house hunting.
    At the moment he has very few outgoings so most of his wages are saved. His outgoings are just a bank loan for his van and a small credit card bill cleared off each month(and the usual fuel and van service, MOT, road tax) . We don't ask for any rent or board so he can save.
    His credit score is good.

    In the meantime whilst he is house hunting what happens if he decides to go into rented accommodation. He will then have rent and household bills to pay which wont have appeared on the checks for the original "mortgage in principle"

    Will the new outgoings invalid the original "mortgage in principle" and if so will he have to start the process all over again.
    There will be new searches on his credit record from the letting agency etc that were not there first time round.
    “Create all the happiness you are able to create; remove all the misery you are able to remove. Every day will allow you, --will invite you to add something to the pleasure of others, --or to diminish something of their pains.”
Page 1
    • ACG
    • By ACG 2nd Oct 17, 10:13 AM
    • 15,879 Posts
    • 8,133 Thanks
    ACG
    • #2
    • 2nd Oct 17, 10:13 AM
    • #2
    • 2nd Oct 17, 10:13 AM
    A mortgage in principle (MIP) is not really worth the paper it is printed on. It is an indication.

    However, if your son gets a decision with one lot of circumstances and then those circumstances change the MIP will be worth even less and a new one will be needed.

    Being in a new address for a short period of time can affect the scoring of an application. It will not necessarily mean he gets declined, if everything else is fine then he should be ok.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • kingstreet
    • By kingstreet 2nd Oct 17, 10:45 AM
    • 32,366 Posts
    • 17,376 Thanks
    kingstreet
    • #3
    • 2nd Oct 17, 10:45 AM
    • #3
    • 2nd Oct 17, 10:45 AM
    Outgoings which will end on completion of the purchase (rent, for example) won't be included in the agreement in principle, so would have zero impact.

    However, moving to a new home will almost certainly lead to a down-score by a lender, so a weak or borderline pass could fall to a decline.

    This depends on the rest of the application data.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • mhoc
    • By mhoc 2nd Oct 17, 11:03 AM
    • 16,075 Posts
    • 199,679 Thanks
    mhoc
    • #4
    • 2nd Oct 17, 11:03 AM
    • #4
    • 2nd Oct 17, 11:03 AM
    thanks for this.

    So he has been back at the home address and on the electoral roll now since April so its just 6 months now - that's a good point isn't it?
    But if he moves to a rental address that will have a negative impact?

    He says it would only be for 3 months while the house buying process was in progress. To me though this is a retrograde step as whilst paying rent and bills will mean he wont be adding to his deposit.

    (My other son moved to a new rented place at Easter and his credit score has not recovered quite yet. He even has searches on his records from Anglia water for setting up the monthly standing order, I imagine these are just "soft searches" though )


    Younger sons income is quite low but according to the tables he can get a £56k mortgage - yes surprisingly there are areas that have houses that cheap about 10 miles from here. He only started saving 3 months ago after he got his finances straight and cleared the credit card etc. By November he might have about £5000 saved towards the deposit.
    “Create all the happiness you are able to create; remove all the misery you are able to remove. Every day will allow you, --will invite you to add something to the pleasure of others, --or to diminish something of their pains.”
    • zx81
    • By zx81 2nd Oct 17, 11:08 AM
    • 14,378 Posts
    • 15,159 Thanks
    zx81
    • #5
    • 2nd Oct 17, 11:08 AM
    • #5
    • 2nd Oct 17, 11:08 AM
    My other son moved to a new rented place at Easter and his credit score has not recovered quite yet.
    Originally posted by mhoc
    Don't use the credit scores as any kind of a guide. It's all about the data and his credit history.
    • ACG
    • By ACG 2nd Oct 17, 11:11 AM
    • 15,879 Posts
    • 8,133 Thanks
    ACG
    • #6
    • 2nd Oct 17, 11:11 AM
    • #6
    • 2nd Oct 17, 11:11 AM
    I think because he has only been at your place for a short period, he would be better holding fire.

    Why does he want to move out for the sake of 3 months?

    I had to move back to my mums for a month when I was buying my first home 4-5 years ago and it was a nightmare. I had gone from complete freedom to being treated like a 15 year old again.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • mhoc
    • By mhoc 2nd Oct 17, 11:28 AM
    • 16,075 Posts
    • 199,679 Thanks
    mhoc
    • #7
    • 2nd Oct 17, 11:28 AM
    • #7
    • 2nd Oct 17, 11:28 AM
    I think because he has only been at your place for a short period, he would be better holding fire.

    Why does he want to move out for the sake of 3 months?

    I had to move back to my mums for a month when I was buying my first home 4-5 years ago and it was a nightmare. I had gone from complete freedom to being treated like a 15 year old again.
    Originally posted by ACG
    This is what we would prefer he did, just hold fire and wait it out but patience is not one of his virtues.
    Some idiot adviser said he could have his own place and have the keys in 12 weeks so that's the thing that is fixated in his head now.
    Ideally we want him to wait fully until January as he is away for an entire month from early December.

    We had an empty nest for a few years and we were just getting used to it when he came back so it was a bit of an adjustment while he was job hunting again and sorting out his finances. He has one full time job and another part time job so he is only here for half an hour in the morning and another half an hour before he goes to bed so we manage not to annoy each other. That is until he starts fixating on mortgages again.

    (for mortgage purposes only the full time job wage is used for calculations)
    “Create all the happiness you are able to create; remove all the misery you are able to remove. Every day will allow you, --will invite you to add something to the pleasure of others, --or to diminish something of their pains.”
    • mhoc
    • By mhoc 2nd Oct 17, 11:30 AM
    • 16,075 Posts
    • 199,679 Thanks
    mhoc
    • #8
    • 2nd Oct 17, 11:30 AM
    • #8
    • 2nd Oct 17, 11:30 AM
    Don't use the credit scores as any kind of a guide. It's all about the data and his credit history.
    Originally posted by zx81
    Everything is up to date, all payments made on his credit card, cleared each month and on his bank loan. Nothing I can think of that would upset a credit score but it depends on how far back counts - don't know what he was up to for most of 2016
    “Create all the happiness you are able to create; remove all the misery you are able to remove. Every day will allow you, --will invite you to add something to the pleasure of others, --or to diminish something of their pains.”
    • zx81
    • By zx81 2nd Oct 17, 11:34 AM
    • 14,378 Posts
    • 15,159 Thanks
    zx81
    • #9
    • 2nd Oct 17, 11:34 AM
    • #9
    • 2nd Oct 17, 11:34 AM
    Nothing I can think of that would upset a credit score
    Originally posted by mhoc
    A spell of bad weather can upset a credit score.

    Ignore it like you would a drunk on a late night bus.
    • kingstreet
    • By kingstreet 2nd Oct 17, 1:34 PM
    • 32,366 Posts
    • 17,376 Thanks
    kingstreet
    Everything is up to date, all payments made on his credit card, cleared each month and on his bank loan. Nothing I can think of that would upset a credit score but it depends on how far back counts - don't know what he was up to for most of 2016
    Originally posted by mhoc
    Imagine a lender has the profile for the perfect borrower.

    Let's say that borrower has lived in the same address for over three years and been with the same employer more than three years.

    A new application comes in and the data is scored using the variations from the perfect borrower.

    Someone who has lived in three different properties and had three different employers in that period is going to score fewer points compared to the benchmark.

    That may be how a weak application may change from a pass to a fail.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • mhoc
    • By mhoc 2nd Oct 17, 1:57 PM
    • 16,075 Posts
    • 199,679 Thanks
    mhoc
    Imagine a lender has the profile for the perfect borrower.

    Let's say that borrower has lived in the same address for over three years and been with the same employer more than three years.

    A new application comes in and the data is scored using the variations from the perfect borrower.

    Someone who has lived in three different properties and had three different employers in that period is going to score fewer points compared to the benchmark.

    That may be how a weak application may change from a pass to a fail.
    Originally posted by kingstreet
    thanks for this - 2 addresses and 2 employers this year with a gap in the middle of about 3 months so now things don't look as good ...
    “Create all the happiness you are able to create; remove all the misery you are able to remove. Every day will allow you, --will invite you to add something to the pleasure of others, --or to diminish something of their pains.”
    • kingstreet
    • By kingstreet 2nd Oct 17, 2:45 PM
    • 32,366 Posts
    • 17,376 Thanks
    kingstreet
    That was just to give you an idea how credit scoring works. It's nothing to do with Experian's 999 nonsense. In fact it uses data the CRAs aren't even aware of, such as employment history.

    The point here is that all the application data and all the credit history data goes into the decision-making process we choose to call credit scoring.

    Looking at your other thread about probation/contract etc an independent broker would be the best next port of call for this to be done properly and successfully.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • mhoc
    • By mhoc 2nd Oct 17, 4:46 PM
    • 16,075 Posts
    • 199,679 Thanks
    mhoc
    That was just to give you an idea how credit scoring works. It's nothing to do with Experian's 999 nonsense. In fact it uses data the CRAs aren't even aware of, such as employment history.

    The point here is that all the application data and all the credit history data goes into the decision-making process we choose to call credit scoring.

    Looking at your other thread about probation/contract etc an independent broker would be the best next port of call for this to be done properly and successfully.
    Originally posted by kingstreet
    Yes, I am thinking this as well, if we can figure out how to find an independent broker.
    He has talked to a mortgage adviser attached to an estate agency just for an initial chat and he is going to talk to Nationwide, his bank
    My daughter used a broker and her mortgage in the end was through Nationwide
    “Create all the happiness you are able to create; remove all the misery you are able to remove. Every day will allow you, --will invite you to add something to the pleasure of others, --or to diminish something of their pains.”
    • wantonnoodle
    • By wantonnoodle 3rd Oct 17, 4:51 PM
    • 217 Posts
    • 149 Thanks
    wantonnoodle
    I wouldn't bother with an AIP/DIP/MIP. As others have said, they are only an indication.

    A lot are only done using soft searches so don't have the full facts, and a full application can have a different outcome.

    What's more, they only have a very short validity period - some are only valid for 30 days. Ours was valid 90 days but ours was only done as stage one of the full application, mainly as the EA wanted one to be able to take the property we'd offered on off the market.
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