Four things that make it more difficult to get a mortgage; working overseas, boomerang kids, self-employment, missing a utility payment.
More and more lenders will not recognise overseas income even when paid into a UK bank account. This will affect people who want to return to the UK having worked overseas and want to buy a house for their family to live in. The problems are compounded by a lack of credit rating information due to their absence from UK, this can be a real problem for some people – not active service because they are UK paid and taxed when overseas but say you’re in the Reserves or leave and do a tour in the Middle East having recently left the Service then, you’ll need a lender who understands your situation.
The Office of National Statistics say that approaching 25% of 20-34 year olds now live with their parents (so called boomerang children) – they can’t afford a mortgage or high rents especially if they are looking for work or saving for a deposit. New affordability assessments count boomerang children as dependants unless they are employed and pay their way in the household. This is likely to have a negative impact on those who want to re-mortgage and get a better deal before the predicted interest rate rises in the coming years. Therefore, parents need to get their “live in” post education children to get a job, any job, to help support an application and ensure they can borrow enough just to arrange their existing mortgage onto more favourable terms.
People who are self-employed and don’t have at least 3 years of auditable earnings history have real issues with lenders as they are unable to prove their income. Therefore, the newly introduced affordability criteria act against both you and your application. Real people need a mortgage provider with a real person making decisions and who understands their position and who can make an informed risk decision – it’s possible but many lenders see it as ‘harder’ business and therefore don’t want to help. Don’t be put off, there are lenders and brokers who can get you a good deal, it’s just that the best high street deals have very strict eligibility and application criteria.
Your credit score is becoming increasingly important as people want quicker decisions and lenders seek to automate parts of the application process, taking away the real people. Missing a payment on a utility or phone bill can have a disproportionate impact and lead to a rejected application regardless of any justifiable reasons – even a bank system failure. You can help your rating by simply ensuring you pay your bills on time, get on the electoral roll and ensure you pay off and stay below 50% of your credit card limit. There are a number of credit rating help systems, try Noddle as a free starting place.
Part of the problem is that lenders don’t really know you and often don’t engage in a human way, rather they save money through digital or ‘tick-box’ forms handled by personnel who are prevented from exercising any judgement. We think that a system where people like you, likely ex-military and from your area, talk to you and will be able to help you understand how to get the best for you. Buying a house is probably the biggest financial decision of your life, would you rather talk to an expert who has shared similar lifestyle and experiences or a robot?
We don’t have mortgages to offer yet, we are working on our Financial Conduct Authority and Prudential Regulatory Authority applications but, if you want to tell us your views/gripes about mortgages we’ll try to ensure that we have better products and a better service for the Services Family.