Agreement in principle

lottie0810

Can anyone tell me what exactly is checked by lenders on an agreement in principle?
My partner and I went through an hour ling telephone application with natwest for their 95% new buy mortgage, we were told at the end that we had been accepted subject to them receiving our signed agreement and documents, payslips/bank statements etc.
I have noticed on my experian credit report that they only carried out a 'generic check' what does this mean? Well I'm guessing it was them as it was searched on the date we applied but it was searched by 'experian interactive'?!
I'm wondering now they have our docs etc will we be credit searched again?
Will look forward to your replies

Thrugelmir

lottie0810 wrote: »

I'm wondering now they have our docs etc will we be credit searched again?

A full credit search will be conducted once the application has been received.

Locana

Hi

I was full credit checked by Natwest for an AIP. They did a generic check a few days later. I then handed in my docs and sometime later received an offer. Was not credit checked since the AIP.

Thanks
Lorraine

holly_hobby

An Agreement In Principle is performed using public domain data (PDD), so as not to leave a "footprint" on your credit file (which can affect future financial applications).

PDD shows Votors roll, CCJs and Bankruptcy Order info - importantly it does not publish defaults, whom you have financial links with ie spouse/partner, os debts with (credit limits, balances, payments etc), or payment profile info (account management history) - which is why you see threads on here where peeps have obtained an AIP, but are flabbergasted when they subsequently fail a Credit Reference Agency (CRA) credit check on submission of a full application. (due to non-declaration of financial commitments and/or defaults/arrears, or indeed something rearing its head they are unaware up to that point).

On the other hand, a Decision In Principle - is issued following a full CRA check, and whilst it will leave a "footprint", if a DIP is obtained generally this is pretty secure due to the thoroughness of the credit check, and as long as your other status info stacks up, you should sail through UW to survey upon submission of your full mge app.

Now, I'm not sure if Natwest do AIPs or DIPs - one of the currently active mge brokers will confirm, although Locana's post suggests to me a DIP is performed.

You should also be aware that mge lenders can and do perfrom ad hoc status checks, right up to completion (so don't go applying for futher credit between offer and completion either !).

If you want to have a look at your credit file with all 3 agencies, then checkmyfile.com, will give you a multi agency report (free trial and v easy to cancel over the web) - but either way, as long as you have declared all commitments, and any adverse or arrears data, your prelimary decision should stand true.

Hope this helps ... good luck !

Holly x

lottie0810

Thank you so much for taking the time to reply holly, that makes perfect sense.

We declared everything they asked but in jan 11 hubby had 2 late payments on a credit card, it wasnt 100% his fault, he bought something from amazon and they automatically opened him one of their credit cards without him knowing, he presumed it was taken from his saved card details. We never received any statements for the account either, it only became apparent when we got a late payment letter. It was settled immeadiately but unfortunately it remains on his file.

I was wondering if they will pick up on this now they have our docs and perform a full assesment and decline us.

holly_hobby

Late payments will ordinarilly be recorded by the creditor, and will affect a credit score - if you had a DIP done and not an AIP, then you should be ok, as this will have been pulled out when the full CRA search was completed in association with the DIP application.

If an AIP was peformed, and the historical arrears will only now be revealled, the lender may instead of automatically declining (if everything else is A1), may just ask for an explanation why the arrears occurred (which you have explained above), and if they are happy that this blip was not affordability related (ie you couldn't manage the payments etc), then it should be ok. (obv LTV and your credit history as a whole will influence their acceptance).

Have a check of your files on checkmyfile.com (http://www.checkmyfile.com/) to see how the card (and the rest of your history has been recorded).

Hope this helps

Holly