MIP - how reliable / accurate is it?

[Deleted User]

Hi,
My DD is currently looking for a flat in London and she has received her MIP (Mortgage In Principle). We are wondering how accurate are MIPs?

She has provided her information (they are accurate - I double checked) to her broker and got her MIP through the broker.

Thanks in advance.

ACG

Some are more accurate than others. 
The main thing is that you enter the information as the lender would expect which might not necessarily look correct - but this usually only becomes applicable if using bonus/overtime/commission/benefits. In the main though DIPs are fairly reliable but it is not a definitive decision as the application will ask more questions than the DIP does. 

K_S

holyrottweiler said:

Hi,
My DD is currently looking for a flat in London and she has received her MIP (Mortgage In Principle). We are wondering how accurate are MIPs?
She has provided her information (they are accurate - I double checked) to her broker and got her MIP through the broker.
Thanks in advance.

@hollyrottweiler To add to what ACG says above, also note that an 'MIP' is also issued by some volume brokers (for instance Habito) giving a borrowing figure based on some basic assumptions (or using the logic of one mainstream lender's affordability calculator), with no soft credit check done. Those MIPs are less reliable (imho) than that issued by a specific lender.

[Deleted User]

K_S said:

holyrottweiler said:

Hi,
My DD is currently looking for a flat in London and she has received her MIP (Mortgage In Principle). We are wondering how accurate are MIPs?
She has provided her information (they are accurate - I double checked) to her broker and got her MIP through the broker.
Thanks in advance.

@hollyrottweiler To add to what ACG says above, also note that an 'MIP' is also issued by some volume brokers (for instance Habito) giving a borrowing figure based on some basic assumptions (or using the logic of one mainstream lender's affordability calculator), with no soft credit check done. Those MIPs are less reliable (imho) than that issued by a specific lender.

Yes, that is my worry. She is using Habito at the moment - her main income is her base pay and her other income is around 10% of her base pay. Other incomes include annual bonus and PIP.

Although we've checked direct lenders' "how much can I borrow" criteria and they all seem to throw up similar range to what Habito is giving us.

ACG

K_S said:

holyrottweiler said:

Hi,
My DD is currently looking for a flat in London and she has received her MIP (Mortgage In Principle). We are wondering how accurate are MIPs?
She has provided her information (they are accurate - I double checked) to her broker and got her MIP through the broker.
Thanks in advance.

@hollyrottweiler To add to what ACG says above, also note that an 'MIP' is also issued by some volume brokers (for instance Habito) giving a borrowing figure based on some basic assumptions (or using the logic of one mainstream lender's affordability calculator), with no soft credit check done. Those MIPs are less reliable (imho) than that issued by a specific lender.

Good shout. If you have a DIP from a broker like L&C or habito, then its worthless. I was working on the assumption you have a DIP from a "propper broker" who would have looked over your credit reports or from a lender. 

[Deleted User]

ACG said:

K_S said:

holyrottweiler said:

Hi,
My DD is currently looking for a flat in London and she has received her MIP (Mortgage In Principle). We are wondering how accurate are MIPs?
She has provided her information (they are accurate - I double checked) to her broker and got her MIP through the broker.
Thanks in advance.

@hollyrottweiler To add to what ACG says above, also note that an 'MIP' is also issued by some volume brokers (for instance Habito) giving a borrowing figure based on some basic assumptions (or using the logic of one mainstream lender's affordability calculator), with no soft credit check done. Those MIPs are less reliable (imho) than that issued by a specific lender.

Good shout. If you have a DIP from a broker like L&C or habito, then its worthless. I was working on the assumption you have a DIP from a "propper broker" who would have looked over your credit reports or from a lender. 

Eek. I did not realise that it was worthless. Does that mean these estimates are widely unreliable as well?

[Deleted User]

Thanks for all the advice by the way - really useful.

annetheman

ACG said:

K_S said:

holyrottweiler said:

Hi,
My DD is currently looking for a flat in London and she has received her MIP (Mortgage In Principle). We are wondering how accurate are MIPs?
She has provided her information (they are accurate - I double checked) to her broker and got her MIP through the broker.
Thanks in advance.

@hollyrottweiler To add to what ACG says above, also note that an 'MIP' is also issued by some volume brokers (for instance Habito) giving a borrowing figure based on some basic assumptions (or using the logic of one mainstream lender's affordability calculator), with no soft credit check done. Those MIPs are less reliable (imho) than that issued by a specific lender.

Good shout. If you have a DIP from a broker like L&C or habito, then its worthless. I was working on the assumption you have a DIP from a "propper broker" who would have looked over your credit reports or from a lender. 

I see how this is the case, but I found the DiP from L&C was close to that from an actual lender via my broker.

Certainly I needed the DiP for my affordability assessments as am using govt scheme, which also means the amount you can borrow decreases. I've never figured out exactly how it works proportionately but worth bearing in mind!

E.g. when I got my DiP from Natwest, it was for 186,000 for a "regular" product/mortgage, then went down to about 109,000 for a govt scheme mortgage with a specialist lender. Rates also increased by a factor of around x3. 

[Deleted User]

annetheman said:

ACG said:

K_S said:

holyrottweiler said:

Hi,
My DD is currently looking for a flat in London and she has received her MIP (Mortgage In Principle). We are wondering how accurate are MIPs?
She has provided her information (they are accurate - I double checked) to her broker and got her MIP through the broker.
Thanks in advance.

@hollyrottweiler To add to what ACG says above, also note that an 'MIP' is also issued by some volume brokers (for instance Habito) giving a borrowing figure based on some basic assumptions (or using the logic of one mainstream lender's affordability calculator), with no soft credit check done. Those MIPs are less reliable (imho) than that issued by a specific lender.

Good shout. If you have a DIP from a broker like L&C or habito, then its worthless. I was working on the assumption you have a DIP from a "propper broker" who would have looked over your credit reports or from a lender. 

I see how this is the case, but I found the DiP from L&C was close to that from an actual lender via my broker.

Certainly I needed the DiP for my affordability assessments as am using govt scheme, which also means the amount you can borrow decreases. I've never figured out exactly how it works proportionately but worth bearing in mind!

E.g. when I got my DiP from Natwest, it was for 186,000 for a "regular" product/mortgage, then went down to about 109,000 for a govt scheme mortgage with a specialist lender. Rates also increased by a factor of around x3. 

Good to hear that yours was close to what L&C stated. I suspect credit history plays a large part in it - if you have a bad credit history then Habito / L&C will be way off as they don't do soft credit check but if you have a very good credit history then I don't see why they'd be way off.

However, I am not a mortgage advisor so I have no idea. 

ACG

annetheman said:

ACG said:

K_S said:

holyrottweiler said:

Hi,
My DD is currently looking for a flat in London and she has received her MIP (Mortgage In Principle). We are wondering how accurate are MIPs?
She has provided her information (they are accurate - I double checked) to her broker and got her MIP through the broker.
Thanks in advance.

@hollyrottweiler To add to what ACG says above, also note that an 'MIP' is also issued by some volume brokers (for instance Habito) giving a borrowing figure based on some basic assumptions (or using the logic of one mainstream lender's affordability calculator), with no soft credit check done. Those MIPs are less reliable (imho) than that issued by a specific lender.

Good shout. If you have a DIP from a broker like L&C or habito, then its worthless. I was working on the assumption you have a DIP from a "propper broker" who would have looked over your credit reports or from a lender. 

I see how this is the case, but I found the DiP from L&C was close to that from an actual lender via my broker.

Certainly I needed the DiP for my affordability assessments as am using govt scheme, which also means the amount you can borrow decreases. I've never figured out exactly how it works proportionately but worth bearing in mind!

E.g. when I got my DiP from Natwest, it was for 186,000 for a "regular" product/mortgage, then went down to about 109,000 for a govt scheme mortgage with a specialist lender. Rates also increased by a factor of around x3. 

Thats an affordability calculator, not a DIP. 

A DIP is in essence a credit check (in full or part), some basic criteria questions and an affordability check. 

ACG

holyrottweiler said:

ACG said:

K_S said:

holyrottweiler said:

Hi,
My DD is currently looking for a flat in London and she has received her MIP (Mortgage In Principle). We are wondering how accurate are MIPs?
She has provided her information (they are accurate - I double checked) to her broker and got her MIP through the broker.
Thanks in advance.

@hollyrottweiler To add to what ACG says above, also note that an 'MIP' is also issued by some volume brokers (for instance Habito) giving a borrowing figure based on some basic assumptions (or using the logic of one mainstream lender's affordability calculator), with no soft credit check done. Those MIPs are less reliable (imho) than that issued by a specific lender.

Good shout. If you have a DIP from a broker like L&C or habito, then its worthless. I was working on the assumption you have a DIP from a "propper broker" who would have looked over your credit reports or from a lender. 

Eek. I did not realise that it was worthless. Does that mean these estimates are widely unreliable as well?

Not really, the affordability calculation should be relatively accurate. Although what they will probably be doing is just a 4.5x income multiple. If your daughter has a  lot of debt/commitments/kids or is reliant on bonuses/commission/overtime, they may not be the most accurate.