What is an 'agreement in principle' worth?

JUMcQ

Feeling a bit sick at the moment...here's why...

Six weeks ago my husband I thought about moving.

We visited the bank and a credit check was run. We passed it and got an agreement in principle for a 95% LTV mortgage.

The happy branch manager's last words were, 'Well now this is the nice bit, just finding a house!'

We put our flat on the market and sold within ten days. Two weeks later we settled on a house we loved.

I went in today to complete and finalise the mortage and lo and behold was told that we had now failed the credit check. In six weeks. No late bills, no defaults, but alas no mortgage transfer for now.

Someone out there must be able to answer my questions as I cannot believe that we have moved so far down the selling and purchasing treadmill in vain.

1. How can we pass a credit check and then fail it in six weeks with absolutely no change in our circumstances? My husband's score was 983, mine was 994 with Experian

2. We already have a mortgage with this building society for about 207. We're extending it to 237 and have never, ever missed a mortgage payment.

3. Our credit report showed 2 late payments to Orange which were never brought to our attention by Orange so as far as we knew we were paying everything on time.

Can lenders do this now? We've sold our flat!!! A surveyor is coming round on Wed. Do we really now just have to throw in the towel, lose our buyer and the house we like when we were told we had passed the credit check.

I'm stumped. And still feeling very sick...

kingstreet

You need to get hold of all three of your statutory credit files;-

Equifax

https://www.econsumer.equifax.co.uk/...erletter.ehtml

Experian

https://secure.wiseconsumer.uk.exper...x.html?data=00

CallCredit

https://www.callcredit.co.uk/stat-re...pl=regPurchase

Which you should take along to a meeting with a good independent or whole market mortgage broker. Ask friends and relatives for a recommendation. Failing that, use https://www.unbiased.co.uk remembering to switch off "sponsored ads only" option so you get a full list, not just the paid-for adverts.

The £2 statutory paper files will be fine. Avoid online schemes you have to pay for which give you your inside-leg measurement and call it a "credit score" as this is different to the lender's, the one which actually matters to you...

JUMcQ

Thanks KingStreet,

I've done what you suggested in terms of the credit reports and they all show the same things. Two late mobile phone payments and two late catalogue payments over the past twelve months.

Is it usual for this to put a halt on a mortgage? Plus...they were at the beginning of the year when we had our son.

If they are on my file now, wouldn't they have been there in Oct when I first made my initial application? The broker I was dealing with did a search (or says she did) and we came up trumps!

Oh well, I guess I'll just have to deal with the disappointment and dodgy data...we're locked in with this building society for at least another year so there's nothing we can do.

I still feel like I've been led up the garden path but I guess that's finance these days.

Thanks again

Thrugelmir

JUMcQ wrote: »

We visited the bank and a credit check was run. We passed it and got an agreement in principle for a 95% LTV mortgage.

Who is the lender?

kingstreet

Is this Halifax or Bank of Scotland?

If not, tell us who it is, please.

rising_from_the_ashes

I might be wrong but the credit check run for the AIP is a pretty basic one checking things like ID etc - it's only when the full application goes in that a full credit check is run which would then have turned up the late payments (and - yes - these would have an affect!)

macman

4 missed payments: of course it will have an effect on your score.
The availability of credit has changed dramatically in the last 3 years, and lenders run scared of anything that looks less than perfect.

holly_hobby

An AIP is conducted on public domain info only - which reveals VR, CCJs and BO info - and as it isn't a payment profile search it doesn't leave a search registration with the CRAs, and the type of search Halifax use for AIPs (whom then conduct a full payment profile CRA search upon submission of a full app - which is why on occassion whilst an AIP will be initially granted, the app will later fall down upon submission of a full app and payment profile assessment).

If a DIP has been issued by the lender, this does leave a "footprint" as it is based on a CRA payment profile search, and as such, as long as there are no late/missed payments or other adverse recorded between DIP and submission, the app should go through to survey and offer.

So, it all depends if you have an AIP or a DIP - to determine which is the reason for Kings.question on the lender involved.

Hope this helps

Holly

JUMcQ

Hi there,

Yes I think was an AIP not a DIP. Thanks for the interesting info about how the different checks work - it's more than the branch manager could tell me.

Things have clearly changed so much...we tried to explain that the late payments only occured in the month after I'd given birth as there were no others there, but our cries are falling on deaf ears.

The lender is Leeds BS and we've been with them 5 years and have never missed a mortgage payment.

I do understand that lenders need to be careful etc...but how on earth is the property market ever going to get moving again if creditworthy people can't buy homes..(our joint annual income is about £105,000) and we were applying for a mortgage of £237,000.

If anyone is still there (!) I'm REALLY nervous about ever going through the whole process again in case we land in the same spot. Orange and LaRedoute have agreed to wipe the late payments from our record as they know that we're good customers and normally always pay on time...is there anything we should do to avoid this next time? Maybe asking for a DIP upfront?

What a mess...I feel trapped in this flat now as I'm struggling to see how we get out!

Dave_Ham

Firstly, 95% loan to value mortgages are as common as Haley's Comet. Given the risk to the bank/building society any missed payments in the last 12 months throws it out, so 4 will be a showstopper.

I think the fault is with the Branch Manager here and remember they are non advised in The Leeds, so they are just keying into a system.

I have seen 95% products fail with Leeds over 1 missed payment, although their system does not necessarily always pick up all the data first time at AIP stage.

Therefore you can pass the AIP and pass the full application (which I assume you did) just not at 95% LTV.

I also feel for the person/persons who were due to buy your place, as they neither would have seen this coming.

If you can do anything within your power to get to 90% loan to value, you options will broaden hugely.

All the best