Ease of use, which makes offers fundamentally attractive to buyers, contributes to the problems they can pose. It is quite possible to enter details about the sites of six lenders during an evening. Mortgage brokers say first-time buyers are most likely to come into conflict with the credit check system by asking in principle for multiple deals early in their home search. A month later, Arley had found the house of his dreams. He returned to one of the six banks and did not get a loan. “I was carrying the expression I had made of the `agreement in principle` they had given me, but they said it was no longer valid,” he said. “First-time buyers want to see what they can borrow first and foremost,” says David Hollingworth, a manager at London & Country mortgage brokers. “Since lenders rely more on affordability than multiples, buyers in principle turn to agreements to set it up.” Any zero-interest credit agreement, including “white goods” such as dishwashers, stereos and furniture. You don`t need to get an agreement in principle, but it can sometimes help when you`re looking for a home (see “How an AIP can help,” below).
The lender will carefully look at your entire financial history, including bank statements, salary and additional income, employment and address history, how much of a deposit you have, and any other savings. This is called an accessibility check. To do this, some lenders perform a “soft” credit check, which means they don`t need to ask your permission to do so and it won`t affect your creditworthiness. This is essentially a background check to make sure the details you provide are correct. Elliot Nathan, director of product development at Charcol, says the problem of multiple agreements is in principle compounded by the electronic processing of mortgage applications. Online applications may be automatically rejected on the basis of information that the system cannot handle. It lists every late payment we make, every district court judgment, every invoice we are late with, and every address we`ve ever had. As mortgage companies move from reliance on simple multiples of the buyer`s salary to loans based on so-called affordability, agreements could in principle be the only sure way for buyers to determine exactly how much they have to spend. Last year, the Financial Services Authority, the Mortgage Lenders` Council and credit bureaus agreed to tackle the problem. The Equifax information bureau, for example, now offers lenders a wider range of audits, including identity searches and requests for tenders, so they are not required to request a full credit quality check unless they need that level of information.
Lenders were asked to update their system settlement agreements in principle so that their controls do not leave footprints. So far, mortgage broker Charcol estimates that only 20 per cent of lenders have systems that work this way, although that minority is Halifax, the largest mortgage lender in the UK. Please click below on a recent article I wrote about the documents needed to apply for a mortgage. Although this is very comprehensive and has specifically focused on mortgage applications. This will give you a good idea of what is actually needed for the whole process, and it certainly won`t hurt you to collect this documentation on time. . . .