Target Group claims it has “re-imagined the role” of a Decision in Principle (DiP), shortening the mortgage application process from up to eight weeks down to seconds for lenders who uses Target’s recently launched Mortgage Hub system.
Target says it has developed a way to provide accurate income, expenditure and property valuation information, at the beginning of the application process. This means that lenders can provide a DiP based on real rather than estimated information.
This DiP process is now a key feature of Target’s mortgage originations system, Mortgage Hub.
Until now, a DiP has usually been given by a lender based on estimated information, both on the value of a property and on what the potential homebuyer believes – or declares – to be their income and outgoings. Often at least one element of this proves to be inaccurate, which can delay the mortgage offer or make it unviable. Establishing this information can sometimes take weeks.
Target’s Mortgage Hub enables the broker to send their client a link to Open Banking permissions at the very first meeting while completing the FactFind. This will verify a client’s income and expenditure in seconds right at the beginning of the process so a lender will know whether the client can afford the mortgage they are applying for.
Secondly, it will link to a lender’s automated valuation model (AVM) where this is available for a property. Target says AVMs cost very little, so it makes sense to do them at DiP stage. It won’t necessarily remove the need for a full valuation, but it can help dramatically speed up the process by providing a real value for a property, not one estimated by the borrower or an estate agent.
Each AVM will be matched to a lender’s risk threshold with a ‘certainty score’ of how accurate the valuation is. Lenders have the facility to flag a valuation as to whether it can be approved or should be reviewed. This will all be done automatically, so will provide an answer within seconds.
This will inform the lender of the value of the property so they can see if it is line with their policy. It will also compare it to the client’s income information from Open Banking, so a lender will know right at the start of the process whether the client can afford the mortgage they are applying for.
Target says these two elements will transform the time it takes to approve a mortgage case. It means an accurate decision can be made in seconds based on real information. In turn, the Decision in Principle that the lender provides is likely to be more accurate, reducing the likelihood of decline later in the application journey.
Katie Pender (pictured), managing director at Target Group, said: “We designed our Mortgage Hub and the DiP process around the people using it. We looked at what the challenges were and then built the Mortgage Hub to provide the solutions. What we have designed will dramatically shorten the time it takes to apply for a mortgage, achieve acceptance and successfully complete. Basing a DiP on accurate information that can be gathered in moments should be transformative, saving time for brokers, lenders and the end client.
“We believe that our Mortgage Hub is the only mortgage originations system that has been built to be user-centric rather than product-centric. Together Mortgage Hub and our new DiP process benefit lenders, conveyancers, brokers, and ultimately the end borrower.
“Mortgage Hub and the DiP process has been built to be intuitive to use, whether you’re a lender or a broker, but it doesn’t stop at DiP stage. Once an application has been accepted by a lender, then both the lender and broker get a single view of what is happening on every case without the need for extra emails, phone calls, notifications or chasing.”
