How are mortgage offers decided?

MsGeorge88

This is a question for the mortgage brokers. How are mortgage decision reached?

Are all information inserted into a computer and then decided or does an actual personal review all your information and make a decision.

mihaicraciunph

I would think an underwriter looks at the individual cases. They have guidelines to help them and all banks are different so I don’t think brokers would know. I would also imagine their criteria is confidential and they differ from one lender from another.

Exodi

Brokers wouldn't know for definite if you'll be accepted (as this is purely at the underwriters discretion) however as I understand, most have an account manager contact at the lender that would indicate their stance on certain matters (plus they have their own experience of applications).

As an example, this could be that account manager A may indicate to a broker that any indication of gambling would lead to an instant refusal, whereas account manager B may indicate that underwriters are flexible on the matter, so long as it is within their financial means.

A broker would assess the 'potential issues' in an application (be it gambling, existing debts, new employment, self employment, etc) and apply to a lender they are aware are flexible on these matters. It's naturally not in their interests to apply for mortgages that you will get rejected on as they won't receive their commission (or meet their conversion KPI's!).

That is typically why the advice is to apply direct if you have a simple application but apply with a broker if you have potential issues.

The information will be entered into a computer (especially in factory-line style brokerships), specifying things like initial term period, type of rate and special terms but the decision would be discretionary.

Please note, I'm not a mortgage broker, this is purely based on what I've experienced and the comments of mortgage advisors on these forums.

robatwork

The mortgage adviser you talk to on phone or in branch will be able to tell you that you WON'T qualify for a mortgage, or that you should be able to. They may even get as far as issuing an agreement in principle. That's all algorithm and PC based.

However it's the underwriter who will actually look at your paperwork when it comes to issuing the mortgage offer, and that's a real person making a real decision. That will be based on your credit history, payslips, P60s and sundry other paperwork, and answers to questions online or in branch.

Although they all will work in the same way, different underwriters will come to different conclusions.

For example I just heard a Dr Karl podcast which presented some research that showed that prisoners up for parole were released 65% of the time just after breakfast or lunch, going down to 0% of the time just before lunch and home time. Incredible finding but I'm sure underwriters are also influenced by how satiated their stomachs are.

ACG

It will vary from lender to lender:

Nationwide for example have about a number of underwriters on a case - 1 for payslips, 1 for bank statements and so on. You also have to pass the credit score.

OTher high street lenders will have one underwriter to check everything once you have passed the credit score.

You then have the more specialist lenders who have criteria that is black and white and do not involve a credit score but a credit check to ensure you fit criteria.

Then there are smaller lenders who have criteria but it can be a little "fluid" if the rest of the case is good.

The high street lenders use the credit scoring method as a way of taking out a number of applications that are unlikely to pass with them. They are larger lenders and need a one size approach to filter out certain applications.

I think now a days it is more a case of lenders checking documents rather than the application form, more so for the larger lenders. They tend to rely on computers to check the application form.

But like anything, there are various ways to get to the end result and it is just a case of finding the lender for you if you are not straight forward.