First Time Buyer - what checks after decision in principle?

sparks11

Hi all,

My husband and I have just had our offer accepted on a property and will be seeing our mortgage broker on Wednesday to submit our full mortgage application. We have a decision in principle from Halifax for up to £250K.

To give you a bit of background, I have a full time permanent job earning £36K per year. My husband is self employed and brings home £8400 per year, topped up wit £21K per year in dividends. The property we are buying is £190K and we have a 10% deposit, plus a little extra for fees, stamp duty etc. We have no other debt. Well, I have £175 on a credit card as I tend to put my fuel on that and pay the full balance off monthly, and my student loan that comes straight out of my wages. Affordability wise, while we probably do have a lot of non-essential outgoings, we're also saving over £1000 per month, so hopefully we should be ok, as we're not trying to borrow the maximum we could.

I'm concerned after reading conflicting advice on the internet that we may still be refused a mortgage. I have a late payment on my account from just under 3 years ago. It was for an old overdraft that I wasn't getting statements for, but that was because I'd forgotten to change my address, so completely my fault. Anyway, it happened, I found out when I checked my credit file and then I paid it off. But by this point it I was 5 months in arrears, so it shows up as a big red '5' on my credit report. It'll be 3 years in May since it was paid off and all other credit accounts are good. My husband's credit file is squeaky clean.

So basically my questions are as follows. Having got the decision in principle, does this mean Halifax have deemed me credit worthy or could this late payment still come back to bite me? Will they do another check when we do the full application? I have read somewhere that if the debt was at a previous address (which it was) then sometimes they miss it at DIP stage and only find it when you apply in full. I was completely honest about it from the start with our broker and she says Halifax are the most lenient and if they say yes, we can then shop around. The DIP says they only want a payslip from me and accounts/self assessment forms from husband, but the broker also wants bank statements. None of this is a problem, but is it really that simple? If we prove our income to Halifax then they lend us the money? Is it worth us shopping around with other lenders given that I have this blip on my credit file?

Sorry for the long winded post, but having finally found a property, now I'm stressing that we will lose it due to my mistake.

Thanks in advance for your help.

betmunch

The Halifax DIP is rubbish, if you have changed addresses in the last 3 years they dont check them properly even though you give them the address.

When the full application is submitted, but before you pay your fees, is when the proper credit check is done.

After that you should be fine as long as your credit profile doesnt change further as they can check again whenever they see fit

sparks11

Thanks for taking the time to reply, I appreciate it. It hasn't really answered any of my questions though. Based on the information I've given, what do you think the likelihood of us now getting rejected is? Should we bother looking at other lenders? I've heard Halifax are fair and lenient. The late payment was for a total of £80, and it was just under 3 years ago. Is this still likely to end in a rejection?

betmunch

unfortunately you wont get an answer until you have a proper credit check done.

Just relax until your appointment, nothings going to change between now and then

amnblog

The Halifax computer will decide your fate. We might be able to make a prediction if we saw the whole file - but not sensibly from a few notes on here.


It appears you have another one of the 'brokers' who make a habit of running a DIP with Halifax with almost every borrower as a start point.

sparks11

Thanks amnblog. What the broker actually said was 'if Halifax say no, you have a real problem, if they say yes we can then maybe shop around'. I'd be happy to share the relevant part of my file, though not on a public forum!

They also mentioned one smaller lender that allow a default within the last three years. Is my arrears as bad as or worse than a default?

MJP43

amnblog wrote: »

The Halifax computer will decide your fate. We might be able to make a prediction if we saw the whole file - but not sensibly from a few notes on here.


It appears you have another one of the 'brokers' who make a habit of running a DIP with Halifax with almost every borrower as a start point.

Is this a flawed method ?

ACG

Do brokers still do provisional dips with halifax? I thought they had basically warned everyone to stop doing that.

A normal dip is worthless, a halifax one is worth even less.

You still have to go through a full credit check, an application and underwriting on top of the valuation for the property. I would not read anything into passing a halifax or any dip.

Also, if halifax do decline you there are lenders who will take on cases halifax do not lend on.

MJP43

That's a worry.....


Surely a broker would know from looking at a credit file how strong a DIP would be ?

sparks11

I was completely up front about this problem from the start, and the broker suggested trying Halifax. If a DiP is 'worthless' what is the point in doing them?

MJP43

I can understand a punter who goes it alone shouldn't be assured by a Halifax DIP but if there are brokers out there who use it to benchmark a credit file without any confidence that it will pass at full app then they are undermining the broker profession