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Join our Property forum for renovation, DIY, and house selling advice.

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Property/DIY

Mortgage (Decision in Principle question)

20 replies

Wiggy29 · 10/10/2013 06:59

Am I right to think that if we have a DIP the lender already checked credit scores etc, so the only way they wouldn't lend (after getting DIP) is if we couldn't prove figures (e.g. if you lied about earnings) or if survey came back with issues (e.g. they would not lend you that amount if they didn't think the property was worth it)? Wow- that was a long sentence!

Many thanks in advance for any answers

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mumtosome61 · 10/10/2013 07:18

I think some banks/lenders work differently. I'm sure that most DO credit check at this point, and considering you've given earning figures I'd assume they have.

The only real way to check is to either ask the lender outright or look on your credit file (Experian or Equifax).

But yes, they wouldn't lend the mortgage regardless of the DIP if the earnings were wrong.

crochetkate · 10/10/2013 07:22

with ours they didnt look at credit checks until after we picked a house, ultimately due to poor credit we lost the house as they wanted to decrease the deposit amount :S

racmun · 10/10/2013 07:30

I think the DIP is given on an assumption that you have good credit and all information is true.

Once you've find a house then they go to the next stage of checking all the info you've provided is true.

Wiggy29 · 10/10/2013 07:53

Oh pants. We have a DIP but we only found out after that I have a poor credit score due to a phone bill that had four missed payments four years ago. I'm in the process of trying to get it sorted with 02 as 99.999999% sure it's an error but mortgage advisor warned me that by the time they sort it/ it filters through to credit score, we could be waiting months (by which time we'd have lost the house).

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TallulahBetty · 10/10/2013 07:54

We had a credit check at DIP stage for both houses. That was with Nationwide so it must depend on the lender.

Wiggy29 · 10/10/2013 07:54

All info was given has been accurate so not worried on that account. DIP is with Halifax (thought I'd add that in case anybody knew their policy).

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Wiggy29 · 10/10/2013 07:57

Argh, really stressed now. I'm the type of person who has no 'bad debt' (only mortgage and student loan), I've always made payments on time and have never even had a credit card!

Ironically, one of suggestions is to get a credit card to help credit rating. The system seems crazy.

Will be devastated if I loose dream home over this. Crossing fingers and toes that they already did credit check and were satisfied with it. Will ask mortgage lender today.

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mumtosome61 · 10/10/2013 07:58

Poor credit will hamper a decision from a lending point of view. Did you go through a mortgage broker? They normally credit check on doing the application, so if they have credit checked you and agreed in principle, then you may be OK.

That said, poor credit is usually a stumbling block for mortgages. Can you speak to the adviser and get a concrete answer about credit checking? If they haven't checked you, I'd really really advise not to have a credit check put through your file if you've got poor credit already; it can alter it, especially if it's declined. Wait till after you've resolved the issue with o2 and then apply?

(sorry, I'm half awake...)

Wiggy29 · 10/10/2013 07:59

Ahhhhhhhh!!!!!!!!!!!!!!!!!! Joy of joys!!!! Just double checked and DIP is with Nationwide, not Halifax (not sure where I got that from).

Tallulahbetty- You made my day

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Wiggy29 · 10/10/2013 08:00

Still going to check with mortgage advisor that they did credit check first.

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mumtosome61 · 10/10/2013 08:02

Definitely definitely check Wiggy but fingers and toes crossed! We've just been through the mortgage process - it was long and lengthy and the house looks like a shithole as it's a renovation but we're here!

Wiggy29 · 10/10/2013 08:06

Ah, here's hoping! Just would all seem so cruel as taken ages to save deposit/ find dream house and to loose it over something that's not my fault! Went into bank to get credit card (to try and improve credit score) and they were happy to give me one with a £7,500 limit straight away- what a crazy world we live in. Don't even want a credit card!

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teatimesthree · 10/10/2013 08:10

I have got a DIP from Nationwide and they definitely did a credit check.

Wiggy29 · 10/10/2013 08:12

Ah teatimesthree- another massive snog to you!!! That's fab news!

So now is my only worries:

Vendor pulling out
Survey unearthing something

Are there any other reasons a sale falls through?

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KazzaRazza · 10/10/2013 09:15

A credit check is done at DIP stage but a further credit check will be done on full application.

mumtosome61 · 10/10/2013 09:59

If they were offering a £7500 credit limit, I'd say you're pretty OK credit score wise.

icravecheese · 10/10/2013 11:32

Lenders will generally do what is called a 'soft' check at DIP stage (doesn't leave a mark on your credit report that other lenders can see, although you CAN see it), then a full check at the final / full mortgage application stage. This is because you might go to several mortgage providers at the beginning of a house hunt to see what different lenders might lend to you, and you wouldnt want full credit checks from each of them, just to get an AIP.

I know that people above say that they had a credit check at the DIP stage, but I'm pretty certain it WON'T have been a full credit check (only one of the 'soft' variety), then a full one is done at the proper mortgage application.

Sorry - hope I haven't dampened your day! I only tell you this as an accountant who has done various courses on mortgage lending / credit scoring etc etc. But if your soft check came back fine (which appears it has) you might actually be ok....good luck, hope all goes through and you get the house of your dreams.

KazzaRazza · 10/10/2013 14:25

Agree with icrave.

Also, just because they offered £7,500 limit on a credit card doesn't mean they'll do the mortgage - very different scoring systems.

RaspberryPear · 11/10/2013 10:10

Sorry to add to the stress getting a mortgage involves but you really shouldn't be taking on any extra credit lines when in the midst of an application.

If your DIP was given without the 7.5k credit card (or any amount) being listed then it may get picked up later on in the process and affect your whole application negatively. The usual rule of thumb is no extra credit from application to competition.

OneStepCloser · 11/10/2013 10:30

Yep, we`ve just got a mortgage with Nationwide and was informed by our mortgage broker that 2 people were turned down because the outgoings on their application for their CC were different when the application was being processed and so not to use CCs or get any further credit whilst the application was being processed.

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