![]() Low AIP to application rates may cause lenders to question the quality of your business, so caution should be used if you do use lenders to obtain a “credit report” but do not follow it up with submitted business.įor me, obtaining a fact find and the supporting information is normally enough to be able to give the client the confidence they are looking for when beginning the house buying process and assuming they furnish me with all the appropriate information they are rarely disappointed. The final concern, that has just been very well illustrated to me by a BDM, is the quality control at lenders. ![]() Indeed, there are those that “forget” to inform you that they had “forgotten” to pay credit – for those that are not too sure there are the credit referencing agencies, some of which are free to use. It is also not advantageous to keep having the clients credit scored, which will ultimately lead to a more negative score. Questions that remain unclear could include, whether the client requires his pension contributions to be ignored or will you be needing to use net profit or dividends and salary if the applicants are self-employed? Given there is no specific loan to value it is difficult to see how affordability is tested if the loan size and loan to value is unknown. I have always been cautious about obtaining an AIP/DIP prior to finding a property, and often advise clients that an AIP from a lender that we may not finally approach for your mortgage is perhaps not worthwhile. Neil Ryner, director at Ryner and Partners The result is one disappointed clients walks away… That’s why getting advice and an agreement is imperative to the buying process. She thought just because she could afford the payment, then the lender would give her the money. Her budget and what she could afford were way off. I had a situation recently where a first-time buyer hadn’t had advice but offered on a property. It certainly is more beneficial for the estate agents as well, as they can be confident that the house sale will progress. There is less chance, after having the advice and agreement that things can go wrong. This way, I also keep in contact, just so they know I’m still there and have their best interests at heart. In my case, I also actively look on right move for a property they may like. It means the clients understand from day one, their affordability, we can manage the expectation and agree a strategy moving forward on the maximum purchase price.Īnd when they find that all important property, the client is confident they can offer knowing that an expert has looked at their finances and agreed their budgets.Īt the early stages, any issues can be ironed out with lenders rejecting on criteria.įor an adviser, it helps keep control of your client. ![]() The benefit can be great for both the adviser and the client. I’m a strong believer in getting an agreement in principle at the very earliest stage in the process. Rachel Dixon, mortgage broker at RH Dixon In my view, the government would be better making some form of basic life cover compulsory rather than AIPs. This is what we do at the moment and we get very few declines due to our thorough questioning and managing of client expectations and their situation, which allows us to marry them unto the right lender first time round. We only AIP a client at the start of the process if they have something in the background that gives cause for concern, for example, bad credit or missed payments, in order to give us and the client confidence that a lender will accept them.ĪIPs in my view are a sales tactic for some brokers and most clients these days are savvy enough to get advice on their upper buying limit before looking and, unless there is something out of the ordinary, a client only needs a AIP at the point of application. Personally I feel that’s wrong, as the AIP is only really valid on that day as the most competitive for the client’s situation.Īnd the downside is that getting AIP’s left right and centre impacts on the client’s credit score. ![]() Most of the big estate agent chains who have brokers in-house will try to get a AIP done in order to make the client feel ‘tied’ into them, so they come back to them when they have found a property. However, these were often done weeks ago and due to the fast pace of the mortgage market and rate changes, it means the AIP the client is waving around is out of date and may now not be the best option. ![]() We asked this week’s Marketwatch panel what they think.Īlastair McKee, managing director of One 77 Mortgagesĭecisions in principle are the bane of buyers’ and other brokers’ lives.Īll too often as a adviser, we will have a client contact us and mention they already have an AIP/DIP in place with another bank or broker. ![]()
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