Different takes on the same bad credit application

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Earlier this month we received an enquiry from a potential bad credit mortgage customer but on greater inspection it became apparent to us that his ‘bad credit’ was marginal and that it wasn’t as bad as the customer had been told.

He had spoken to another broker prior to speaking to us but by coming to Mortgage Success, our application saved him £25,000.

The customer had been completely open with the former broker in that he had had some bad credit issues and also use of Pay Day loans which can affect a mortgage application. Hence him using a broker.

The broker that he had spoken to however, had said that their fee would be around £2,000 and the rate they could get would be over 5%.

Fair enough? Customer has had credit issues and so it is to be expected that the rates will be higher because of that?

The Mortgage Success take…

We asked for the credit report to check for ourselves, and sure enough there were negative markers on there, but actually nothing too bad.

Once we had reviewed the credit report, we told the customer we think he can potentially get high street rates, but failing that there would be one or 2 “middle ground” lenders who would be looking at rates of around 3% before have to look at rates in excess of 5%.

The customer completed the factfind and with everything combined we thought it was definitely worth looking at the high street in the first instance.

We always like to give customers an absolute worst case scenario but when it comes to making applications we start at the better end and work our way down if those applications are declined.

In this case however… Success! The DIP was agreed.

There are Mortgage Brokers out there who will go straight to the worst lender out there because they know it will be accepted.

But we think that is the wrong approach.

Our job is to get the best deal with can for you. Sometimes that means going to a lender where it is not a given they will accept the application, but will not cause any harm to a second application if it is not accepted.

In this example, by taking the approach we did, our way would save the customer over £25,000 in mortgage repayments in just 2 years! Added to that we also saved them £500 of the lender application fee, money on the valuation fee and to top it off, our broker fee was £1500 less also… Well over £27,000 saved by running it past us.

There were reasons the savings were so much. The Mortgage was a large one, around £500,000, so that did make a big difference to the monthly repayments, meaning this is quite an extreme case but even on smaller mortgages the savings can still be substantial.

It also appears the other broker went straight to one of the adverse lenders that typically caters for the more extreme cases, where as this application was borderline high street, or the better end of the adverse market, we are looking at worst case and best case options.

I would like to think most brokers whilst may not have gone to high street, would have chosen a better adverse lender.

Summary

I think this is one of those cases where (blowing our own trumpet) we did a good job, but the other broker did a poor job and so the 2 things combined probably makes us look better than maybe we deserve. But it does show that if you choose the wrong broker for the job, what could happen.

As a bad credit mortgage broker, we specialise in what is and crucially what isnt ‘bad credit’ so we know how to proceed from the outset.

if you have a potential bad credit mortgage need and want to save money on your next mortgage, get in touch.