Decision in principle - how accurate?

amylloyd98

Hi All,

FTB here with not a clue as to how house buying works - I’m trying to learn as much as I can before making the big step. 

Me and my partner are both FTB looking at purchasing a property hopefully some time this year. My question is, how accurate is an online DIP? (i imagine this may be like asking how long is a piece of string, but i’d like everyone elses experiences)

for context, I have ran an online DIP via nationwide which does a soft credit check and it says £315k. That seemed like an awful lot, so I was wondering what variances people have experienced

On a separate note, are your spending habits heavily taken into account when you apply for these things? I know that you often have to provide 3 months bank statements so I’m trying to save as much as possible and limit my outgoings starting this month - but I do like to spend on non-necessity items (clothes etc) - nothing that i can’t afford, just something i like to do! I can obviously stop this style of spending, i was just wondering how detrimental this was to a mortgage application 

sorry these may seem like silly questions, i’m just trying to learn as much as possible!

TheJP

amylloyd98 said:

Hi All,

FTB here with not a clue as to how house buying works - I’m trying to learn as much as I can before making the big step. 

Me and my partner are both FTB looking at purchasing a property hopefully some time this year. My question is, how accurate is an online DIP? (i imagine this may be like asking how long is a piece of string, but i’d like everyone elses experiences)

for context, I have ran an online DIP via nationwide which does a soft credit check and it says £315k. That seemed like an awful lot, so I was wondering what variances people have experienced

On a separate note, are your spending habits heavily taken into account when you apply for these things? I know that you often have to provide 3 months bank statements so I’m trying to save as much as possible and limit my outgoings starting this month - but I do like to spend on non-necessity items (clothes etc) - nothing that i can’t afford, just something i like to do! I can obviously stop this style of spending, i was just wondering how detrimental this was to a mortgage application 

sorry these may seem like silly questions, i’m just trying to learn as much as possible!

The DIP gives you an indication on how much the lender is willing to lend based on income, when it comes to the full application you will then go through an affordability check which takes into consideration of outgoings etc. If you have considerable outgoings then the amount the lender is willing to lend will reduce.. An example of my experience, DIP showed £400k but the amount offered after he affordability and credit checks was £370k.

Its a good idea to limit unnecessary spending leading up to an application

lookstraightahead

DIP means very little as it's to do with what you input without many (if any) proper checks by the lender.

That's why I find them strange as 'proof' of funds when you people look round houses.

Personally I would stop all non- essential spending for a good few months. Don't open new accounts, pay your credit cards off etc 

ANewEra

My (very recent) experience of this - DIP was £385,000. Actual offer - £298,000. So a HUGE difference! Went from looking at 4 beds to 3 beds. On a positive note though, the repayments are going to be much less. 

Jonboy_1984

For a FTB I would recommend going via a local broker - ours was worth their weight in gold both in the initial explanations, and in dealing with the fall out of Northern Rock collapsing around our purchase...

amylloyd98

Thanks all so much for your responses, all extremely helpful!  Really appreciate it

One final question if I may, is it worth going to a local broker before even searching for properties? As I guess its difficult to know what value properties we can look at if the DIP vs mortgage offer will have quite a big variance!

Jonboy_1984

I would say it is absolutely worth doing for that reason, they have calculators that will look at your entire financial positions (regular loans, credit card balances, car finance, dependants etc etc) and have a good idea of which banks to place you with.

They may also have broker exclusive rates with some banks.

It also puts you in a much stronger place to resist estate agents insisting you see their in-house broker which always rings alarm bells for negotiating on a property later.

steve866

I would always use a broker. My offer 2 years ago was significantly reduced due to the commission element of my salary, a broker managed to find another lender who got me the full amount. Luckily my original application did not affect the my second application with another lender. 

Gavin83

I would also recommend the services of a broker. I was always under the impression brokers were for people with complicated circumstances but we opted for one to answer any questions we had. He was extremely useful and he got us a better deal than I could find and believe me I looked.

I wouldn’t say they have to be local though, everything we did was remote and it’s not a role that requires local knowledge.

I’m happy to send the details of the one we used if it would prove useful, although I suspect several people here could make such a recommendation.

amylloyd98

Thank you so much to all of you this has really helped us out. First plan is to limit spending for the next 3-4 months, then we will contact a broker and begin a proper search for a property. 

Thanks again for all of your time on here it really is so helpful!