Last month we were approached by a couple who were looking to purchase their first family home.
They had a good deposit, good stable jobs and on the face of it were in a good position. However, in the background there were a number of defaults over a 2-3 year period ranging from £100 to £1,600.
They had been to another Mortgage broker who had managed to get them a Decision in Principle but the application was declined after it had been fully submitted. The broker then advised them they had no alternative options and they could not help.
How did we help?
The customer was quite prepared, they had a breakdown of all of their defaults, the amount, who to, when registered, when repaid and an explanation for each off them – this is the first time we have seen this in 9 years – We loved her!
The defaults either stemmed from a mix up (ie switching accounts and cancelling the DD but then the final payment not taking and then late fees etc being added) or from a period with lower pay due to going on maternity pay.
Bad credit normally falls into one of 3 categories:
- Habitually missing payments,
- A reason (redundancy/ill health/marriage breakdown etc),
In this case because the defaults were over a 2-3 year period, it is hard to put these down to anything other than the first category but that was a little harsh for this particular case.
We spent some time speaking to smaller manual underwriting lenders and after some back and forth we managed to get an underwriter to be sympathetic to the application.
We discussed the plus points of the application:
- good deposit,
- good jobs,
- the customer had satisfied all of the defaults, most of which had been satisfied at least a year prior.
The underwriter agreed with us, it was a little 50/50 but they could see the customers had done a lot to show this could be looked at as a one of blip despite being over a 2 year period.
We managed to get them a Mortgage offer at a rate of around 2%. We worked hard for this one and there was a lot of evidence gathering and back and forth but because the customer was organised and both the customer and underwriter were happy to work together we managed to get there in the end, even if it did take around 3 weeks.
When we discuss your situation with you, we are always looking to understand the circumstances… We are not just being nosey. Sometimes the circumstances can be the difference in getting a mortgage or not or paying a higher rate. In this example, we could have gone to a sub prime lender and got them a rate of around 4.5% all day, but they now have a rate of less than half of that which is great for a new family making a fresh start.
If you want to talk to us about your situation, please do get in touch, it does not matter which of the 3 categories of adverse you fall in to, we will always try to look at the options available and discuss them with you.