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My partner and I are in the process of buying our first home. We had been to the bank to get the Agreement in Principle, found a house and got an offer accepted and now have been back to the bank and got a mortgage illustration (is this the same as a mortgage agreement?).

Every time we have been to the bank we have been asked to take bank statements, payslips, and two forms of ID with us. We have never been asked for any of this by the bank, they seemed to just take our word for our finances and our income.

We also have not signed anything from the bank, we didn't sign anything to say that we agree to the mortgage illustration saying how much we are borrowing, over what time period and what our monthly repayments are.

Is this normal practice, or has the bank done something wrong here?

  • Is it worth adding which bank it is? Is it one of the big high street ones or a niche one? An agreement in principal isn't really anything legally binding. They haven't agreed to lend you the money, and you don't have to take them up on their (potential) offer. – Neil Mar 5 at 10:00
  • @Neil I don't think adding the name of the bank would be beneficial. I will say it is a big high street bank, that everyone in the UK would have heard of. – JackU Mar 5 at 11:22
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Yes, this is perfectly normal. A mortgage illustration is basically “This is what this mortgage will look like assuming everything you’ve told us is true”. It’s in a standard format so that you can easily compare different mortgages and choose the one you want, and you might well get several of them. It’s not binding in any way. Your next step will be to get a mortgage offer, which is binding (on the bank, not on you until you accept it), and that’s when the bank will do all of its due diligence.

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  • I don't know if this is true in the UK (probably is) but the bank worker is also obliged to report any attempts at fraud unveiled during the due diligence. One doesn't only risk losing the mortgage conditions by lying to the bank. – Mindwin Mar 4 at 17:06
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    @Mindwin - in broad general terms there's nothing like that in the US (everyone would be in jail) – Fattie Mar 5 at 0:38
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    @fattie I disagree. Not all reports generate criminal charges but they are mandatory in some cases. en.wikipedia.org/wiki/Bank_Secrecy_Act - Disclosure: I worked with a bank regarding security and compliance. – Mindwin Mar 5 at 12:07
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    @fattie Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports if the daily aggregate exceeds $10,000, and report suspicious activity that may signify money laundering, tax evasion, or other criminal activities. - emphasis mine. The dreaded "form 8300". – Mindwin Mar 5 at 12:08
  • As someone currently comparing mortgage cost sheets, I just want to point out that the format is anything but standard! While they contain the same basic information, the formats and naming conventions vary wildly between banks in my experience. The cynic in me thinks this is actually by design to make comparing the cost sheets more difficult. (edit: just saw your UK tag and I'm jealous if ya'll actually have a standard format) – Helpful Friend Mar 5 at 18:23

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