Around 2 years ago we did a Mortgage for a first time buyer. The customer at the time had perfect credit, a good stable job and no debt – there were absolutely no issues and his application flew through.
2 years later and the customer wanted to move house to be closer to family. Because we knew the customer and there were no issues last time, we just assumed there had been none since and requested a Decision in Principle with a lender and to my surprise the Decision in Principle was declined.
What did we do?
My first instinct was to call the lender and find out what was going on and ask if they are declining this customer, who do they accept… Their reply was that there was a default and some late payment.
I was still a little unsure and thought the lender had it wrong. I called the customer and he told me there had been some issues but he had paid them all off now so did not think it would be a problem.
That came as a bit of a surprise and meant I needed to get a copy of the credit report (something we do for every customer, but made an exception this time) and re-do the research.
We found a lender who was marginally more expensive, the monthly repayments were around £5 a month more. The biggest difference was that the fees were around £500 more, but these were added to the mortgage so was not noticeable in one lump sum. The main thing was that it was still a high street lender and the rates were still normal. We submitted a Decision in Principle to them and it was all ok this time. The full application followed and no issues were raised.
I think this is a great example of where we ask for the truth, the whole truth and nothing but. If we had known the issues, we could have gone straight to the second lender.
This would have saved time, reduced stress levels and resulted in one credit check rather than 2. In the end however the customer ended up no worse off so there was no harm done in the end.
This is also a good story to explain why we ask for credit reports. You may not think there is a problem or may not even be aware, but it is best to know about any possible issues beforehand, worst case scenario everything is as expected and there is no harm done.
Thankfully this was an existing customer who we had built up a good relationship with and he had full trust in us so although the pressure increased a little everything was still quite relaxed and calm.