If at first you do not succeed, try, try again has never been truer than in this example in how an application for a mortgage with Pay Day Loans & Default played out.
Hint, we delivered for the customer.
The customers had previously gone to another Mortgage broker (before coming to ourselves) and discussed their circumstances with the prior broker. That broker came back with a bad credit mortgage rate of around 5.5% (with a bad credit lender) due to Pay day loans taken out the previous month and a default which was a couple of years old but had been satisfied.
The customers, being aware of the bad credit, were happy with that, but wanted a second opinion to see if there was anything better out there.
What we did
We are always reluctant to go straight to a specialist bad credit lender in the first instance if it can be avoided. Rather, we aim to see what lenders could be approached who would consider the application, as this can also result in much lower interest rates, and with the 5.5% on offer we had a feeling there were better options out there that should be considered.
With specialist bad credit lenders the fees are usually more expensive and the underwriters want more information and they also take longer.
So it is in everyones best interest if we can source a lender that is somewhere between the high street and the specialist bad credit lenders.
Following this train of thought, we sought a better option.
There is always a risk that the new application would not be placed at a better rate, but as the offer was on the table from the previous broker at 5.5% and even albeit there was a chance it would be declined, “nothing ventured nothing gained” and we explained to the customer of our intended action plan and the reasons behind it. They agreed.
We applied for a mortgage at a rate of around 1.7% which would obviously be much much lower repayments than the 5.5% on the table and the application passed the credit check
However, when the underwriter picked it up, they were not happy with the recent pay day loan usage due to there being one or 2 every month for around 12 months.
The underwriter then said we would need to leave it for around 3-6 months before they would reconsider it to ensure the customer was not reliant on them.
We then went to the lender the original broker looked at as they would have been our Plan B due to them being ok with Pay Day loans and adverse and there already being the 5.5% rate on the table.
All was looking good until the Corona Virus hit. That lender subsequently pulled out of the entire market at 85% LTV loans which basically meant the application was cancelled by the lender, as it would have been for hundreds of customers in the same position.
By this point around 2 months had passed since the original application and due to the way the market was closing down because of Corona Virus we decided to give the original lender another try.
That was a little bit of a nervous wait as it was probably 50/50 at best due to not being 3 months yet.
The application went in once more and the underwriter called up to discuss the case.
She had a couple of concerns regarding the prior Pay Day Loans & Default, however we talked them through and she was happy with everything and agreed the case subject to valuation which had been put on hold due to the Corona Virus lockdown, but we asked if she could use the valuation from the application in January time – which was agreed.
This was quite a long winded Pay Day Loans & Default application and not helped by the Corona Virus, but in the end the customer will have saved over £25,000 in repayments in just 2 years!
Literally the repayments were around £1,000 a month lower, the original lenders fees were over £500 lower and our fees were £1,500 lower.
3 applications in total for the applicants, but we managed to get it through eventually with the original lender and saved the customers a lot of money in the process which just goes to show that even in a difficult market, not giving up can be the difference between getting a Mortgage or not.
If you are struggling with obtaining a Mortgage even in the current climate, please do get in touch and lets see if we can help.