Along with the welcome update that NatWest would not produce hard footprints for broker submitted cases, unless they progressed to a full application, the search for suitable mortgages in the ever-changing environment appears to be a trickier landscape to navigate.
So this week, Mortgage Solutions is asking: Are you having to produce a significantly higher number of DIPs for each case?
We are not performing significantly higher numbers of DIPs, but this reflects the initial research we have always carried out to make a lender recommendation.
Using mortgage lending criteria tools such as Knowledge bank and Criteria Hub help create the shortlist, and then Mortgage Broker Tools allows an affordability check. The lender business development managers (BDMs) can also be useful here if there is any doubt.
Once all of this is complete, we can submit the DIP to the recommended lender with a good degree of certainty it will be accepted – and most cases are, first time.
Where cases are declined, it will often be down to undeclared credit file issues. There can be disparities between the data stored across each of the credit file platforms.
This means that sometimes using the wrong one misses adverse data stored on another. Also, the dark arts of credit scoring can be steeped in mystery and kill an application, with usually no appeal.
However, we rarely have to submit more than two DIPs as a result. Needing to submit three would be a very bad day.
This is no different to our normal ways of working, and getting it right first time is always the intention, instead of taking a punt that a lender might just take the case.
It has long been a mystery to me why lenders would insist on leaving a hard footprint. Mortgages are not like unsecured credit, where a significant number of credit arrangements can be entered into on one day and allowing different providers to see recent activity becomes more important.
The lenders who use soft footprints still create a hard footprint if the case comes in as an application that fits their risk profile, so it shouldn’t matter how many other DIPs have been requested.
A high number of DIPs may just be that the adviser hasn’t been doing the initial research thoroughly enough.
It’s great news that NatWest has swapped to a soft footprint. It’s definitely one of my favourite lenders due to their good service, competitive products and flexible criteria.
Having a soft footprint is just another string to its bow.
Before we produce a recommendation and proceed with a decision in principle, we ask for as much of the client’s documentation as they can provide.
This also includes a copy of their credit report.
We believe we offer our clients a level of service they don’t get elsewhere and due to this our DIPs usually go through without a problem.
The most important thing for our clients is getting them a positive result and if we have any doubts we will involve the lenders as much as possible, as early as possible.
The biggest problem we have at the minute is down to how underwriters are assessing affordability and how this doesn’t always coincide with what the affordability calculators suggest.
We’ve also had issues with BDMs not understanding their own criteria.
Just this week I’ve had an issue with a gifted deposit that a BDM confirmed wouldn’t be a problem, only for it to be an automatic decline at DIP. Luckily the client had several options, and we were able to proceed elsewhere.
It’s generally the same big high street lenders that cause the same issues and I’ve found other brokers have had similar issues. Ultimately, it just means we are less likely to recommend these lenders in the future.
When it comes to a DIP, most lenders already offer soft footprints upfront – both for residential and buy to let.
However, we double check beforehand in case they’ve changed their stance, because we don’t want a DIP to end up being a hard search. Then we apply accordingly.
Prior to that, as part of the fact find we try to understand what the client’s expectations are in terms of rates and fees, then we do a deep dive into their credit profile.
What we do now is, if a client has a county court judgement (CCJ) or missed payment, we ask them to download their credit file. That circumvents us placing a case with a high street lender who may or may not accept defaults.
Sometimes the credit report shows one thing, and the lender picks up on another thing, so it gets referred for further checking or declined.
If it is declined and we are confident it fits the lender’s criteria, we’ll pick up the phone, ask why it’s been declined and go through the credit report over the phone or send it to them for review as different details and timeframes are analysed.
We do sometimes produce multiple DIPs but we try to minimise it so it’s done once or twice and we can work smarter. If we keep producing DIPs, it means we’re throwing mud at the wall and hoping it sticks.
Because of the way the market is, lenders have increased appetite for certain levels of credit score. Many want clean histories with no blips in six years, let alone 24 or 36 months.
You pay for what you get, if you want low rates hovering at one per cent, you’d need a really clean credit profile.