Sometimes a Decision in Principle (or Agreement in Principle) can be declined. Even we have some that get declined and infact it was a declined Decision in Principle which prompted this post.
I think the key thing to consider is whether or not it was expected. I know sounds a bit of a silly thing to say, why apply for a DIP if you are expecting it to get declined?…
Were you expecting it to be declined?
As mentioned, it sounds like a silly question but stick with me.
There are times we look at a a credit report or a factfind and we think everything fits criteria but it will get declined. It is hard to explain this but after 12 years of doing the job, we just know. Some of you reading this may be able to relate to it from parts of your job.
But sometimes it is worth a try, it might unexpectedly pass. We have examples where we did it as a punt as the alternative would have been a much higher rate and by attempting the DIP it would not have affected Plan B.
But obviously there are times we try it and as expected it declines. Assuming there is a Plan B, then do not worry. It was a hit an hope and you were expecting it, so there is no real detriment.
Was it a possibility?
Similar to the above, although in these cases you were maybe a little more confident or hopeful it would pass the check.
In these situations, its sometimes worth a little more time and effort. It might be that your case is borderline and with some tweaks it could fit. It might be that you are putting down 19.8% deposit for example. Upping that to 20% would get you to the next banding and the scoring may be better. Or other lenders it could be a case of switching the applicants around as applicant 1 weighs more than the second in the credit scoring.
There are various things we can do. There are also plenty of times we have had a decline converted to an accept with a bit of time.
Was it unexpected?
An unexpected decline on your Decision in principle is a bigger issue than an expected decline. It can really knock your confidence and cause a lot of stress and worry.
In these situations it is important to try and understand why. Is there a reason? Have you looked at your credit reports? Have you checked that you fit criteria and pass affordabitliy? All of this forms part of the mortgage research we do (believe it or not, its not just a case of finding the cheapest deal).
If everything fits, it could just be a case that they were not the lender for you. Again we have plenty of examples where we have gone to the cheapest lender, they were declined so we went to the second or third option where the extra cost is minimal (sometimes it might just be the fees are £5 more!) and it has been accepted.
There are other times where something may have been missed. We had a case earlier in the year where the customers adverse was only partially showing up on one credit report. They only declared the adverse from that report and so when the DIP was carried out and the lender picked up on the other bits, it was declined.
Even an unexpected decline is not the end of the world.
What can be done?
Firstly if you are not sure why it has been declined, try to find out. Most times there is a reason. Once we know the reason we can try to find lenders who are not worried about it.
If there is not a reason then usually it is just a combination of everything making it difficult to pass the credit scoring process. Again, in those cases its not usually a deal breaker. A short time in a job along with a gifted deposit at a high LTV can make it hard to pass a credit score. In those scenarios, we can look at non credit scoring lenders or lenders who are a little more relaxed on their scoring.
But in short, sometimes a declined Decsion in principle is expected. Sometimes they are not. Dont let it knock the wind from your sails! Get in touch if you would like us to take a look for you and give you an honest opinion on whether we think we can help or not.