What happens if you don’t fit the ‘mortgage mould’?
As anyone who has applied for a mortgage recently will know, lenders may be offering very preferential rates, but they are being over particular about who they lend their money to.
Although 2017 saw the highest level of mortgage borrowing since 2008 spurred on by the continuing low interest rates from the Bank of England, most of these were mid-market and low loan to value borrowers who represent the safest bet for mortgage lenders.
So, what happens if you are categorised as a ‘non-standard borrower’? Kosta Shabrov, mortgage specialist for Homeline Mortgages in Poole states that this is where the services of a broker come to the fore.
“If for example you attempt to source your own mortgage using an online comparison website, you could fall foul of their automated credit scoring processes. Mainstream lenders can sometimes look less favourably upon people who have a poor credit history, are self-employed, borrowing into retirement, are divorced or have irregular income. It’s a numbers game which doesn’t always take into account individual nuances “commented Kosta.
“The main thing is not to panic. If you do come under the term ‘niche borrower’ there are still plenty of smaller lenders who are geared up to making mortgage offers.”
Some of the high street names will still lend to non-standard borrowers but brokers often find that the preferential rates with fewer obstacles to overcome are from the less well-known brands. Those seeking a mortgage shouldn’t be put off by going with a less familiar name, your broker will do all the research to ensure that you are getting the best mortgage available which will suit your individual requirements.
Since the credit crash and the implementation of new affordability rules came into force, some potential borrowers have found themselves becoming mortgage ‘misfits’.
Kosta went on to say “We can help identify the right lender for your personal circumstances. For example, there are lenders who look favourably upon freelance workers or the self-employed. Others are more flexible if you want to borrow into pensionable age, and so on. Your mortgage broker should be independent and not tied into any specific lenders and their detailed knowledge of the market should enhance your chance of getting a mortgage offer.”
At Homeline Mortgages the advisory team are used to supporting potential homeowners and helping them improve their borrowing prospects. For anyone thinking of applying for a mortgage the same advice will stand them in good stead, such as reducing any other borrowing including loans or credit cards, checking their credit score, and preparing a history of financial detail, such as income and all outgoings. In the case of being self-employed you’ll ideally need up to 3 years’ accounts verified by an accountant and proof of your earnings.
If you would like to discuss this, or any anything else, contact our advisers today on 01202 937444 or visit our other websites to speak to a mortgage broker in Reading or a mortgage broker in Bournemouth
A fee may be charged should you proceed with a Mortgage or Protection application. Please ask your adviser for further details. Your home may be repossessed if you do not keep up repayments.