Those whose credit history would seem desirable still get turned down for mortgages. But there is hope, says Aydin Mustafa of Horizon Mortgage Company, a specialist broker that also packages for lenders
People with a seemingly ‘clean’ credit history have no problem getting secured loans and mortgages, right? WRONG! As many as one in four people can be turned down the first time, which in turn can damage their next attempt as well. But there are ways to avoid falling into this trap – and there are things you can do if you do not conform to what the high street lender wants to see on their application forms.
Firstly, do be reassured that a good mortgage company will be able to help you if they have specialist knowledge of the numerous different requirements of the many lenders – and of the even greater number of schemes each lender creates. This will save you the pain and cost of a failed application. It is not hard to be turned down for something trivial if you or your broker apply to the wrong lender in the first place.
For example, you may be declined if you are self-employed but have no accountant. If you have missed a credit card payment, or if there is a default to any other payment, you may also be turned down. You may not qualify because of a credit score being too low. There are many different scenarios that may affect your chances of being accepted or refused when applying for a mortgage, but this need not be the case.
A specialist mortgage company will know from checking your details where to place your mortgage application so that you are accepted first time. Furthermore, if you were to be declined due to any errors or omissions in your details, a specialist mortgage company would be able to re-submit your application to a new lender immediately without several new credit checks being collected along the way and adversely affecting your chances even more.
A specialist mortgage broker is familiar with what will and will not cause a major problem for you because they not only deal with run-of-the-mill, easy to place mortgage applications, but also with niche situations. For example, if you are approaching retirement many lenders will not lend money to you over a long enough period to make monthly payments affordable to you. This does not have to be the case as there are lenders who have different views on older people borrowing from them over a longer term. Another example is purchasing a property where there is a gifted deposit, a family purchase or else a vendor deposit. It can also be limiting when most lenders have a simple income multiple to decide how much they will lend you; with house prices having risen so much in the last six or seven years fewer and fewer people would qualify by this method. Interest rates are still lower than they have been for many years and many can often afford more than the income multiple route will allow. Some lenders, however, will base their lending on an affordability calculation of their own – which nearly always means you can borrow a lot more.
In this short article it is not possible to cover every situation that can lead to a mortgage application being refused, but we do know that in just about every circumstance an application is refused, there is another lender who will happily accept the situation you find yourself in. This is why a specialist mortgage company can help you through the maze less painfully. Therefore it would be wise and more convenient to use a specialist mortgage company before trudging through the high street, as their knowledge will give you the best chance of success.
Horizon Mortgage Company Ltd 0800 298 1160