A recent study by Aldermore Bank showed that first-time buyers are more likely to be rejected for a mortgage than they were a year ago.
Unfortunately, more than two in five said that they had been rejected more than once. This compares with fewer than one in five before the pandemic.
In the survey, the top reason for mortgage applications being rejected was due to having a poor credit history (41%). What’s more over a quarter of prospective first-time buyers said that they were worried about their credit history with over a third currently seeking to improve their credit score.
In our experience, an often repeated mistake is for first-time buyers with any kind of complexity and/or poor credit to seek to obtain a mortgage via their bank first and this will more often than not result in a rejected application.
This can lead to despair, desperation and sometimes shame and embarrassment, but brokers like ourselves are experienced in helping such customers.
‘Complex’ customers
This is demonstrated by our recent partnership with the well regarded online mortgage broker, Mojo Mortgages who are referring their ‘complex’ customers to us.
We have vast experience in helping such customers obtain mortgages with a range of options not available directly to customers and also many other broker firms.
Regrettably, the survey also highlighted that more significant credit issues are becoming more prevalent too with nearly a quarter (23%) having an account handled by collection agencies, one in nine (14%) having taken out a payday loan, 12% having a County Court Judgement (CCJs) and 9% having a bankruptcy in their past.
These findings are being echoed in our day-to-day dealings with customers and it’s clear that the pandemic has impacted the finances of many, but that need not mean that they cannot obtain a mortgage.
As we have stated in previous blogs, the more thorough and better prepared we are from the onset – in terms of asking the right questions to generate relevant and detailed responses from our first-time buyers – the less time we will spend firefighting issues further down the line. Ultimately, this also means less stress will be placed on the client, throughout this process.
By enlightening customers to the many options available, no matter what your circumstances, we can remove the supposed stigma and shame of having poor credit and help make your home ownership dreams a reality.
Dale Jannels is managing director of Impact Specialist Finance
To speak to impact Specialist Finance visit the website or call 01403 272625.
