OK so cards in the open, there is only 1 Default and 1 Delinquent account but it did not have the same ring in the title if I took the S off them.
I very nearly did not write about this case as I thought it was a little too simple and is example of something we do on a daily basis so unlike many brokers who see it as something complicated to overcome we have maybe become a little immune to applications like this. But after speaking to another broker about it, I thought it is actually a good example of where using an experienced bad credit Mortgage Broker whose fees may be a little higher can actually save you money over a cheaper broker…
We received an enquiry from a lady who had a 10% deposit, most of which was gifted from her parents. Following a marriage breakdown there were a couple of issues on her credit report:
- A Default from 18 months ago.
- A Delinquent account from 12 months ago.
- Various arrears.
When we spoke to the lady, she was not holding out much hope of getting a Mortgage but did confirm she was prepared to pay higher rates if necessary – to some extent.
What we did:
I like it when people tell us what they are prepared to do as it makes our job quicker and easier. Some people say they are not prepared to pay higher rates as they think it will mean that is all we will come back with. In reality it actually means we look at everything in one go rather than doing the job once with normal lenders and then having to go back over it again with more specialist lenders if we can not help at normal rates.
Off we go, we make a start on the research and due to the deposit being less than 15% there are not many specialist lenders available, so we call those first to ensure we have an option even if it is less than ideal. Once we know we can get one of those lenders on board, we can then start to look at the more mainstream options where we think there is a chance of normal rates. Some lenders are more open to these things then others.
After a few hours research we had 2 potential options for the customer, one was normal rates (2.99% no arrangement fee and £500 cashback!) the other was not as competitive with some gap in between the 2.
We put the application in and within 2 weeks we had the Mortgage offer in hand.
The customer was over the moon. Not only were they not expecting to get a mortgage, they were thinking if it could be done the rates would be around 4-5% with fees of a grand or 2.
These are cases we do on a daily basis and we class them as our bread and butter cases. We do not even bat an eye lid. I think this is a perfect example of where a Mortgage Broker with experience in bad credit can come in to their own despite the fact there was not even much adverse to overcome. The reason I wrote about it is because I was talking it over with another (experienced) broker I know and his thoughts were that it would never go through at normal rates and would not have attempted it with a normal lender. The funny thing is that our fees are tiered based on the level of adverse and we classed this as no/minor adverse so it was our lowest tiered fee.
To put this in to context with what another broker would have done, when you compare our fee and the lenders fees (and the cashback!) with what another broker would have done, the customer was £1250 better off with us just in fees alone – that is before you count the difference in interest.
However, on the face of it, our fee was £250 more than the other broker…
These are applications we do not talk about too much as the bad credit is relatively minor, but they are just as important as the ones where the applicants have 15 defaults and a bankruptcy to overcome.
If you have an application with minor credit blips or severe credit issues, please do get in touch. We are not tied to bad credit lenders and actively try to get applications through on the high street as much as possible. Lets have a chat and see how we can help you.