Agreement in Principal - to check credit

emma_jayne_2

Hiya

Bit of background - I am a first time buyer, looking to buy in the next couple of months.

I got my credit report back from Equifax today, just wanted to check it before I start the proccees. Result not good, score of 332. My mortgage advisor looked at it and says there is nothing to worry about on it - just a couple of late payments.

Anyway, she suggested that she could do a agreement in principal just to check that I would be accepted for a mortages. I am not sure how this would work as I don't have a house in mind yet. Silly question but it does not mean I have to go through with getting the mortages does it?

Em

homer_j_3

I would never ever credit check anybody for he sake of it. If your advisor has any degree of experience, they should be able to get a good feel to whether it would be accepted or not.

If you have one credit check now and then in 2 months time, you find a house and then that lender isnt offering the best deal and you need another credit check doing and that fails for whatever reason, you are risking ruining your credit further.

I would only be asking to do an agreement in principal with any of my clients prior to finding a property and having an offer accepted where there wasnt time for the client to get their own and/or the client really was giving me concern to what may be on there.

HTH

fivemice

I thought most lenders did soft searches for AIPs?

AndrewSmith

fivemice wrote:

I thought most lenders did soft searches for AIPs?

Not always. SOme do a full search and score, some don't credit check at all at AIP merely assess you against mathamatical lending criteria.

Don't do it purely for the sake of seeing if you will get accepted. Any good broker should be able to interpret your credit report accordingly and thus know where to place the case by their knowledge and experience, and by talking to the lenders prior to submission.

An AIP is a good idea but only once a suitable lender has been researched and found. Then submit an AIP to that lender to establish your borrowing capacity, putting you in an informed position when you begin looking for property.

Used properly they are a good tool, this sounds like the work of a lazy or inexperienced broker to me.

Fairdo_2

On to my soap box!!!!!!

There are a selected few lenders who do soft footprint (or quotation searches).

At the moment, to my understanding, the lenders that do it are the HBOS lenders, namely Halifax, Bank of Scotland, TMB, Birmingham Midshires Solutions and Intelligent Finance. Now these searches could be for a current account, mortgage, loan, overdraft, etc and they do not specify for what purpose.

I have been assured that they, therefore, do not create a footprint and cannot do any harm to your chances if you went elsewhere.

Accord Mortgages became the next to do this and Skipton are promising that they are doing this within the next three months. Regular contributors on here may have noticed that this is a particular bug bear for me.

If the technology is there to do this, why aren't all the lenders (particularly those that rely on affordability based on credit score) using this system.

In my view this is far too restrictive for the consumer bearing in mind that if you asked a lender how much you would be able to borrow. If they cannot work out compitently what you could borrow without having a credit score on you, then they should not disadvantage you by undergoing that and placing a footprint on your record. Hats off to the HBOS lenders and those who are following on this but much more needs to be done to put pressure on Lenders to adopt this approach.

I have been annoying the lenders representatives now for nearly 2 years on this subject. Every time they see me I ask them to give feedback to their authorities about this and the more lenders that come on board, the more pressure this puts on the stragglers. But until this pressure becomes more widespread, I think it will fall on deaf ears.

I still urge you brokers that contribute on this forum to do the same, as I think this is a great selling point for a Lender still and when the balance finally shifts to more lenders doing it than not, the ones left behind would need to catch up or face the bad press!

Little old me can't get much done, but more of us brokers will help. Even better, someone of our esteemed Martin Lewis' calibre (if he hasn't got enough on his plate like bank charges and exit fees) would be a great person to start off the campaign in earnest! How about it Mr Lewis?

emma_jayne_2

Hiya
Thanks for all your help, although I must admit I am slightly more confused than I was yesterday!

I think that the general consensus seems to be for me not to get a AIP as this might put a mark on my credit status. My advisor did say that there was nothing too damming on my report - just a couple of late payments but she could do an AIP anyway - just to be sure.

I guess it would be better to wait until I have found a property and mad an offer accepted?

My advisor is not affiliated to any bank - she is independent and I found her through one of the estate agents I have been look at property through.

Would anyone mind having a look at my report so I could get a 2nd opinion?

Thanks

Fairdo_2

Sorry to confuse things then.

Yes, I would strongly suggest you do not do an AIP until you have found a property and that you know what figure you will want to borrow against which purchase price, as this would mean a new AIP would have to be done if different figures are involved.

Worried

So should you not get an AIP until you have found a property? I thought you would select the product you wanted and get an AIP and then find a property and when an offer is accepted, apply for the mortgage?

Fairdo_2

Worried wrote: »

So should you not get an AIP until you have found a property? I thought you would select the product you wanted and get an AIP and then find a property and when an offer is accepted, apply for the mortgage?

Worried.

In my opinion, no. Not unless as a last resort, you are worried about how your credit past may affect you.

As I have mentioned before, some lenders may do you less harm if you did do an AIP, but any lender that creates a footprint on a credit score to complete an AIP (Agreement In Principle) then how would you know exectly what purchase price and Loan To Value (LTV) you would subsequently require. Therefore, it is not safe to assume that you would buy to £Xamount and therefore work on what your potential maximum borrowing could be. Any time the LTV would change, it could mean a new credit score, therefore a new footprint on your file.

It is obviously better to work your way down if you do AIP before you buy, but best to get a copy of your credit file beforehand if in doubt and then start looking once you are satisfied of your circumstances.