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Credit Challenges shouldn’t mean ‘the end of the road’ for viable mortgage options.
Even in - what looks like - an economy where inflation is heading downwards, the overall pressure on household incomes shows no signs of abating just yet.
Within the mortgage market, we’re all acutely aware of what an inflationary environment is doing to mortgage rates, and while many existing borrowers will be protected from this because of their existing fixed-rate mortgage deals, when they do come to remortgage they are likely to be looking at increased monthly mortgage payments because of the rates currently available.
Data
Indeed, statistics from Which? last month suggested that 2.4 million households had missed or defaulted on an ‘essential payment’ such as a housing, a bill, loan or credit card payment in the month up to the 13th July this year. Now, by the time, these individuals come to remortgage or indeed look for finance to purchase, these blips and credit problems in general might be firmly in the past, however for borrowers who have these on the credit records over the past six or 12, or even more historical than this, they will need to be considered, and they may well determine from which lenders they can secure their mortgage from.
Contact your local BDM to see how they can support your new and existing cases.
Challenges
For advisers this can be a difficult conversation to have, particularly with borrowers who have been with high-street lenders for all their mortgage ‘lives’ but are now finding that, not only are they unable to secure these deals, but they are remortgaging in a much higher-rate environment. Which of course is why advice in our space is so important, and why it is also vital we have a strong specialist residential mortgage marketplace for those borrowers who may have credit blips or historical ‘marks’ on their credit records.
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Solutions
It’s also why we recently introduced a Tier 4 to our product range, which covers borrowers who haven’t had any significant adverse credit in the last six months, complementing Tier 3 for those who haven’t experienced credit problems in the last 12 months.
As a specialist lender, it’s important we acknowledge that credit changes/difficulties/missed payments, etc, exist at a moment in time, and for many borrowers while very important, they can be fleeting, and recovered from relatively quickly.
*This article was originally published on BestAdvice
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