Our client wanted to remortgage their primary residence, which was currently mortgage-free. They needed to raise money to buy a new vehicle and also to send their daughter to university.
The client had already approached several other brokers, all of whom were unable to assist him. The client had recently missed several mortgage and unsecured loan payments in the previous 12 months therefore he had what is referred to “Adverse” (bad) Credit.
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Generally most lenders will outright decline a mortgage application if there have been any missed mortgage payments in the last 12 months. The client could have waited until the payments were more than a year old, but they wanted the money right away.
We started with a well-known High Street Lender because they didn’t have any specific criteria for missed mortgage payments and considered it based on credit score. Unfortunately, the case was rejected due to not meeting the minimum credit score required. The client’s credit report was unaffected because the lender just performed a ‘soft check,’ which leaves no trace.
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The next best option was to contact a Lender that specialises in providing mortgages to clients who had previously experienced credit problems. The Lender approved the mortgage application because the arrears had been paid in whole and the client could show that no payments had been missed in the previous six months. This loan was available with a loan-to-value ratio of up to 85%.
Summary: Adverse credit doesn’t instantly dismiss the ability to being able to get a new mortgage. Specialist Lenders exist in the market for circumstances when this happens and they are willing and keen to work with clients all the time. However, access to these Lenders is invariably restricted to clients introduced firstly via Brokers and secondly, typically only “whole-of-market” Brokers work with the Specialist Lenders such as these.
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