This is a good one. I think it helps to shows where an experienced broker can really make the difference in your application. I have to admit, I was probably far more confident with this application on day one than maybe I should have been (which rarely happens, I am normally more conservative).
Having over 10 years experience with adverse mortgages, I understand that the processes with normal high street mortgages is very different to a normal mortgage. Very rarely do I get spooked (which is apt considering it is October!). But I started to get a little concerned part way through the application process on this one.
The background
We received an enquiry from a couple looking to purchase a property. The couple had some adverse, nothing we have not seen before, a few unsatisfied defaults from a year or 2 prior.
Both working in good steady and stable jobs, deposit was partially saved and partially gifted.
On paper this was our bread and butter type of case, no concerns and full expected it to fly through…
What happened?
It did not fly through!
The underwriter picked up on sick pay on 3 of the last 4 payslips! Ordinarily this would not really be a problem, we would give an explanation and that would be fine. Unfortunately the underwriter we had was quite concerned by it and reluctant to put her name against the offer.
They wanted a letter from the employer to confirm the applicant was back to work full time – which we obtained. But the underwriter still had concerns.
After getting a little frustrated at the lack of movement, I called up the underwriter and she explained her position. In fairness, it was hard to argue with her thought process. I think she was a little surprised when I told her I understood… I think she may have been accepting a more argumentative approach.
This is where I was getting a little concerned…
In the back of my mind I was thinking “What is Plan B?”
However, we (myself and the underwriter) started to have a chat. We started talking about the clients and how despite her concerns this is actually a good case. The LTV was good, so risk of the lender losing money was slim. Their payment history was generally good bar the one blip where the defaults all came about at the same time.
We also talked about how they had saved part of their deposit so are not in financial difficulty. They were also currently renting so had a history of paying rent and bills.
In short we were looking at each potential problem individually and overcoming them. But then we got to the sticking point, the sickness and the concern that it would result in loss of job or drop in income.
At that point we started to look at how much of that applicants income we actually needed for it to fit affordability – it turned out to be around 30%. That was all we needed from her income for it to pass affordability.
The outcome
When we sat down and talked about the risk to the lender and their ability to pay, we realised that even if the applicant was off, if they only worked 7 days a month, it would still pass affordability.
We were going back and forward for around 10 days with notes and questions. Then we picked up the phone and in abut 40 minutes we had gone from being almost enemies to understanding each others thought process to being able to find a way to justify the case.
Summary
I fully expected this application to fly through. The underwriter had other thoughts and thats fine as that is their job. We will not always agree with them and sometimes we have to battle it out – some we win, some we lose.
In this case though I could fully understand the underwriters opinion and in all honesty I was expecting to have to go with Plan B. However just by having a chat, talking about the clients and trying to make it work we managed to get them over the line.
If the clients had wanted the absolute maximum they could get, I dont think we would have got there. But there were enough positives to overcome the negatives. I think that is a really important thing to remember if you have bad credit. We know that is not great, but cane we butter it up and make it a little more palatable to an underwriter?
Without wanting to blow my own trumpet, I think this was a case of a good broker and a good underwriter working together to get the best outcome.