The Mortgage Success customer case involves a bad credit mortgage application with The Mortgage Lender that stems from earlier this year when we received an enquiry from a gentleman who was looking to purchase a new home.
There were a couple of issues to overcome on this application, those included:
- Fluctuating income,
- A large drop in income from the previous year,
- 4 Defaults – the most recent being less than 2 years old,
- Use of Pay day loans.
What did we do?
Like any bad credit mortgage application we sit down and understand the issues. We wanted to understand why the income fluctuates so much, not just for the Underwriter but also to ensure that they will be able to afford the mortgage in the long run.
There is also a big concern from lenders when it comes to Pay day loan usage as that is often a sign of other issues – although not always. In this bad credit mortgage application, the pay day loans were historic and were due to the drop in income. Lastly we wanted to get to grips with the defaults and understand how they came about.
Once we had sat down with the customer we found out that their income does fluctuate yes, but it is due to the nature of their job and this will always happen.
Previously they had lived a lifestyle based on an income during the years with higher income and had prepared for the inevitable drops. They had learnt from the mistake and now were living within their means and purchasing a home that they could afford during the times when their income is lower.
We were able to explain this to the underwriters in order to get them on side.
We managed to find a couple of potential options, but in this case we narrowed it down to The Mortgage Lender (TML) due to a couple of other lesser issues that ruled out other options.
This was actually quite a complex case to overcome in the end, a little more complex than most bad credit mortgage applications and we initially expected due to the number of issues, it would be hard to place, but alas we placed it.
However one of the key parts to this bad credit mortgage application success story is atypical of our daily routine as our job is to understand what happened to cause the bad credit issues in the first place and explain to the underwriters what the mitigating factors are, or were.
One of the key things on this application was that the customer acknowledged they made a mistake in the past, they did not try to blame anyone else and they made steps to address the issue. That attitude and action got the underwriter on board with everything as all of the issues could be linked to a period in time and by being completely honest and upfront, was a good sign they had learnt from their mistake.
Had their been multiple issues and the customer had tried to pass the buck it would have come out in the wash when trying to get paperwork to evidence it and I think in that case the underwriter may have taken a different view on it.
How can we help?
We understand that some people may be reluctant to share person circumstances and the issues behind past financial faux pas and indiscretions but it pays dividends to be upfront and honest from the offset, as this case only proves.
Like the underwriters we place the cases with, we do our homework and we try and head off any foreseeable issues that can mean an application being rejected.
Underwriters are not interested in being lied to or having the wool pulled over their eyes and we take the view that it all comes out in the wash, so let us know before it all comes out anyway, as we can then understand what has caused the issues we have to overcome and put the application together with full knowledge.
When we have the full story what we do is we draw up a list of the issues you have raised and anything else we think may be an issue whilst filling out our factfind.
We then go off to discuss this with our account managers and do the research to come back to you with some options. In this The Mortgage Lender (TML) case there were 4 major issues and 1 or 2 lesser issues, so we identify and look to work with the lenders who we think are likely to find a way to move forward.
If you have multiple issues, give us a call. An upfront and honest chat can set your mind at ease.
Whether you are looking to purchase a home or remortgage with bad credit, we will always give an honest assessment of your circumstances and how realistic we think your chances are of being accepted on the first call where possible.