Normal Mortgage Broker procedure

finishfirst

Hi,

Just going through the mortgage procedure at as FTB.

Applying through a mortgage broker with help to buy, but before they consider me for anything they want to do a credit check. Is this normal? Will it affect any future searches when they check for a mortgage, they couldn't answer me whether it would be a soft or hard search as that was up to the advisor.
Ive been through the normal affordability checks and the lenders check.

Just wanting to make sure this is what all brokers do before hand, i can see why they would want to do it, just don't want it to affect the hopefully very soon mortgage application.

Thanks for any answers

Senior_Paper_Monitor

No responsible broker should (and most can't) run a credit check on you - they should request you to obtain your report and give it to them (more detail and doesn't risk harming your subsequent score with the lender).

I am a little confused by your description of events (I think you might be misunderstanding something).

finishfirst

Thanks for your response -

They did the original affordability checks and lenders checks yesterday, then rang this morning and said before we can proceed with the help to buy application/mortgage application they needed to do a credit search/check on me.
They took previous addresses from 3 years and confirmed with me about current credit cards, and car loan. Confirmed all names and addresses were spelt correct and then said they would run the credit check and get back to me before 4pm the next working day, telling me whether we could proceed with the help to buy and mortgage application.
It is a "mortgage company" that the new house builder suggested.
Im just a little worried that the more searches are done before the mortgage application will affect it

amnblog

In my view good practice would be that tHey should be informing you of the lender and product terms they are considering before getting your permission to run credit checks with a lender.

The rules say

MCOB allows firms freedom to adapt their sales process to the differing needs of consumers. If a consumer does not want an illustration of cost, but does want a decision in principle then a firm can give this without having to provide a KFI – see our guidance at MCOB 5.5.6G. The triggers that determine the need to provide a KFI are set out at MCOB 5.5.1R. Undertaking a credit search to give a decision in principle does not, on its own, commit the consumer to a mortgage application (in terms of MCOB), although it might commit the lender to the decision.


When a firm decides to get a decision in principle for a consumer, and this involves a credit check, we look to firms to act in a way that overcomes any difficulties that repeated credit reference searches might pose to consumers shopping around. One way firms may seek to achieve this is by considering the credit reference best practice guidelines on credit searches (see the searches section of Experian's Compliance website. These require firms to make it clear to the consumer from the outset that they are processing an application for credit and will carry out a full credit search. This will place a credit application footprint on the consumer's credit file because they are seeking a commitment from the lender to lend. They also provide that a firm must not credit check a consumer if the consumer only wants an indication of likely cost in the form of a quotation on a standard priced product (see below for application to risk-based pricing). In other words, a firm must only undertake a credit check where the consumer wants a formal undertaking from the lender that they will lend.

finishfirst

Thanks amnblog.

From what I understood from the phone call, it wasn't linked to any lenders, just a check for the mortgage broker to proceed with the application - seems strange to me. As they haven't said their checking with a particular lender. Their words were "we need to do this credit check before we go forward with the help to buy application - the bit before I even look at mortgage application!

Senior_Paper_Monitor

Not one bit of that makes any sense to me (best guess is they are doing a DIP - not the way it should be done !).

amnblog

As SPM says, brokers can't do credit checks, they ask a Lender to run them.

Therefore your broker should be deciding on your most suitable Lender in order to have a check run.

The regulations preclude the broker offering your application to a Lender whose criteria you do not meet.

What you have outlined here sounds like cart before the horse.

minimike2

There used to be a packager who you could submit details to and they would provide a copy of the credit search details back in their online fact find, which would save the client having to get their own report - I am not sure if anywhere still offers this service or not (I imagine not) - Either that or as said they are running a DIP with a lender before presenting a KFI to you, which sounds like an odd way of doing things.