Happy Friday! This week, do you think you can’t get a mortgage? What specialist options are out there that can assist you in the event of poor or adverse credit? What’s our favourite thing to do at Foursquare HQ? How can Principality help you (and not just in Wales!!!)?
Read on to find out more!
Thousands of potential homeowners aren’t applying for a mortgage because they mistakenly believe they would be turned down, new research suggests – Source: www.moneywise.co.uk
Seven out of ten (70%) people think a low credit score, zero-hour contract, payday loan, new job or even parental leave would prevent them getting a mortgage, according to mortgage advice website Online Mortgage Advisor.
Nearly half (47%) believe a low credit score could stop someone getting a mortgage, one in three (33%) think a zero-hour contract would be a barrier and 15% think a payday loan would stop an application from being accepted.
While it is not necessarily the case that these would be automatic barriers to getting a mortgage, it can make it harder for some and those who are accepted may have to pay a higher rate of interest or borrow a smaller sum than otherwise.
The survey - which questioned over 2,000 people - found the same percentage believe starting a new job or being on a probation period would prevent an offer being made and 6% think parental leave could cause problems.
Pete Mugleston, managing director at Online Mortgage Advisor, says a huge number of consumers are in the dark about what would prevent them from borrowing.
He says: “It’s sad to think so many people would avoid applying for a mortgage because they think they’d automatically be turned down as a result of a reason that is actually acceptable for many lenders.
“We may be a long way away from the pre-credit crunch days of no income, no job or asset mortgages and free-for-all credit, but lenders do recognise that people’s circumstances have changed and as such, many have adjusted their criteria to reflect this."
He adds: “Lenders will use the information found within a credit report to assess a customer’s eligibility, but they won’t make a decision purely based on a credit score.”
Nick Morrey, product technical manager at mortgage broker John Charcol, says: “A low credit score is an issue for some people looking to take out a mortgage. If people don't keep up with their mobile payments, have a contract for utilities as they pay cash or they are not on the electoral roll, they are not going to score as highly on their credit check. This will affect the amount you they borrow, so someone with a 10% deposit and a poor credit score could be turned down by a lender.
“Lenders don’t just go on your credit history with a credit reference agency like Experian. They are also concerned about stability such as how long you have lived at your address or been with your bank.
He adds: “The idea that that it is difficult for people to get a mortgage with a bad credit history is genuinely not true and even if they do there are plenty of lenders out there such as Kensington, Precise and Magellan who will lend. Borrowers will be accepted for a smaller mortgage just not the amount they are looking for.”
If you have got a bad credit rating because of past problems, it can be difficult to find a lender willing to offer you a mortgage.
If you have got a poor credit history and are worried that you won’t be able to get a mortgage, all is not lost.
While having a poor credit score can make getting a mortgage more difficult, there are some lenders that can help.
If you have been turned down by a high street bank or building society you might want to try apply through a specialist lender.
Specialist lenders include names such as Precise Mortgages, Pepper Homeloans, or Cambridge Building Society.
However, you must remember that specialist lenders usually require a larger deposit and charge a higher than average interest rate. Also make sure that you are confident you will be able to keep up with payments.
There are also a number of steps you can take to improving your credit score.
First of all, make sure you pay all bills on time as missing them can have a negative impact on your file.
If you are having trouble paying off debts, it could be a good idea contact your creditors to set up a payment plan.
Stability plays a huge role in determining your credit score. The longer you have had a credit card or have been in the same address the higher your credit score will be.
Being on the electoral roll will also show stability to a lender and give you a stronger score.
For advice on your eligibility for a mortgage, click here.
We have been able to help many people who have had issues in the past obtain their first mortgage, or move on when they didn’t think they could.
In a recent case, a customer in Cardiff was due to come to the end of his interest only mortgage and his bank, Santander, had called the debt in and threatened to repossess. The customer also had debt secured against the home for a credit card that he had relied on when he had been made redundant five years earlier, as well as other missed and late payments in the background.
Santander refused to offer the client a new product due to the issues with the credit file. We were able to work with the client to repair his credit profile over the course of 3 months, whilst negotiating for him with Santander to stop them calling in the funds. We subsequently have now placed an application with a specialist lender that has just gone to offer and the client is delighted that he is now able to get a mortgage and put a difficult chapter of his life behind him!
This week has seen us doing one of our favourite things. Helping first time buyers get their first leg up on to the property market. We’ve helped 4 new customers with their mortgages for their first ever home in the last week, alongside helping two others remortgage. It’s a busy time of year with lots of people looking to beat the Christmas rush and move home, and as recently shared, a huge amount of people are sitting on (or about to be sitting on) their lenders variable rate. We urge anyone who has a fixed or discounted rate coming to an end in the next three months to get in touch urgently – Even a standard remortgage, whilst straightforward and not particularly stressful, can take up to 8 weeks to complete
From Our Network – Alan Browning, Principality Building Society for Intermediaries
Have you heard our exciting news? At Principality, we’re absolutely delighted to be named Which? best mortgage lender in the UK for customer satisfaction. Over the last 5 years we’ve made significant improvements to our service and expanded our BDM support to our broker network with 8 of our 9 Field BDMs now based in England. We also recently welcomed Alison Smith to our Desk BDM team. Alison was previously a senior underwriter at the Society and is now helping me build relationships with intermediaries in the South West.
A quick update on ‘Let to Buy’ and how we can help your customers:
If your customer wants to keep their property and let it out whilst moving into another property, we can offer capital raising for both home improvements and for the deposit towards the onward purchase. Proof of an onward residential mortgage is not required and the property will be assessed as a buy to let re-mortgage.*
If you’d like to find out more about how Principality Building Society can help you open doors for your clients, please contact either, Alan Browning t: 07767 352 566 e: firstname.lastname@example.org or Alison Smith,
t: 02920 773 348 e: Alison.Smith@principality.co.uk
Alan Browning, Principality Building Society Field Business Development Manager
*subject to underwriting and affordability.
As always, more next week, have a great weekend!