Are you an Agent or a Developer?
Any experienced selling agent and property developer knows a Decision in Principle (DIP) or Approval In Principle (AIP) is often not worth the paper it is printed on. But you be surprised at the number of agents who insist on a DIP at the offer stage or before they take the property off the market. Just highlights the lack of understanding.
Bizarre & Worrying!
At Max Mortgages we appreciate the goal is not to obtain a DIP or a Valuation, but a formal mortgage offer that helps get us to completion of the purchase. We fully understand we need to support the business of our introducers whilst looking after the interests of a purchaser. None of our introducers get paid unless there is a completion, and neither do we really. And this is something we bear in mind when we qualify and validate all potential purchasers.
Otherwise we are just wasting everyone’s time and our introducer may lose creditability with vendors – and that’s bad for business and just not on. By appreciating the pressure vendors usually put on our introducers, we are committed to ensuring accurate qualification of all potential buyers and then swift progression if their offer is accepted. Not a generic thumbs up full of potential problems!
If you are not already with us, then some of the benefits of becoming an introducer are :
- Accurate & personal assessment of each potential purchaser/registration ensuring more offers progress to completion. Normally same day
- Swift progression to Full Mortgage Application, not just a DIP. Application submitted only after full local vetting to maximise success rate & speed
- Regular Feedback & Updates throughout to ensure you can maintain a happy vendor
- More Applications to Offer, and quickly
- Additional regular income stream for your business
- Flexible fee structure for your referred customer. We are here to support you
- Thinking of working with us? Want to know more? Email us at [email protected]
Remember we will qualify all potential registrations and buyers based on their specific circumstances and the property in question. We prefer to be honest rather than polite. If we think it can not work, we will inform the applicant why and what, if anything, could be done to change that.
A decision in principle is just that! It is not binding and may not even be accurate. Often at the DIP stage, little or no documents are required and therefore the indicated loan amount may be pretty inaccurate. Basically a formal DIP will carry out a hard credit search that leaves a footprint on the customer’s file, often unnecessary. IF the customer passes credit scoring, a DIP will indicate the maximum loam amount the lender MAY be prepared to lend based on the information provided, which will then be subject to a FULL assessment, document verification and property valuation. So effectively a DIP is nothing more than an invitation by the lender for a Full Mortgage Application (FMA) and the loan amount indicted on the DIP is the ‘up to a maximum amount’ the lender will consider based on their generic criteria. And every hard credit search has a negative impact on the customer’s credit file. Not much going for it really is there?
Upon making the Full Mortgage Application, the client may receive the indicated amount, a lower amount or nothing at all. As a DIP is not a full mortgage application, many factors are assumed or ignored. There were times past where a decision in principle was subject only to a valuation – Not anymore.
Some agents put purchasers in a Valuation race. This is also unprofessional and unethical. Some lenders will request a valuation upon receipt of a mortgage application before any real vetting is undertaken. But they may then decline the application for a host of other reasons weeks later! Whereas other lenders will fully assess the application before they instruct the valuation. We have had instances where customers whose mortgage has been fully assessed put in a Valuation race with a purchaser who hasn’t even made an application! If there is any race to be done, then maybe who achieves a formal mortgage offer first! Its not about who is at first to the corner, but he completes the whole race!
So we will shortlist lenders for our clients based on their actual situation, lender criteria and their proposed loan to value against a desired property type. So rather then undertaking a credit search and leaving say 10 other factors to chance, we do the opposite. We cover as many factors as we can and only leave the credit search/score to chance. And even that is a small risk as many customers are aware if they have had any adverse credit issues in the past. Those who are unsure, we encourage them to access their Experian & Equifax credit reports before we confirm if they may be eligible for a mortgage and how much. But we do make it clear to our introducers if we see any potential problems or delays with any particular applicant. Then you can decide based on the overall situation, who you wish to proceed with.
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