In the words of Simply Red all those years ago “Money’s too tight to mention”. Never a truer word spoken than now.
The figures prove it. UK households are under severe financial pressure. At the end of July, people in the UK owed a total of £1,843.8 billion. That’s up £37.3 billion from July 22. It means the average debt per household including mortgages is £65,661[1].
It’s getting harder to pay the bills. A specialist lending study by Pepper Money states that 7.9 million of UK adults could be considered to have adverse credit. 31% of those think this will make it harder to get a mortgage. What is adverse? Anything that doesn’t fall into vanilla lending. That could be a broad range of borrowers including self-employed, and those on short-term contracts, right through to those with CCJs and bankruptcy orders.
Use your skills
This is when your skills as a mortgage adviser can be put to best use. It’s time to think outside the box. You have a huge role to play. Traditional high-street lenders may shy away from lending to customers with adverse credit and a less-than-perfect credit score, but it might not daunt some smaller lenders.
One example that can affect a borrower’s credit score is loan defaults. This year, lenders have reported the UK’s biggest increase in mortgage defaults since 2009, a trend that is expected to continue into 2024 as people struggle to meet mortgage payments[3]. A quick search on our Criteria Brain platform based on ‘defaults registered between 12 and 24 months’ brings up 60 lenders who will potentially consider this criteria.
A poor credit history doesn’t necessarily have to be a showstopper however if you can get a client back on track with a good credit score they may stay with you for life.
Show some empathy
This is something to consider when meeting the needs of Consumer Duty. Show a little empathy and take time to get to know the client’s full financial status. We looked recently at how to help your clients improve their credit score.
Specialist product solutions are out there. Low score and no score products; adverse credit; complex self-employed; high LTV and shared ownership; affordability challenges; and flexible underwriting with no maximum loan. The skill comes in finding the right product for your client.
Ian Scarrott, Senior Corporate Account Manager, OSB Group, alluded to this in his keynote presentation at our Mortgage Vision roadshow events and highlighted the role mortgage advisers can play in these difficult times. There are new business opportunities there for the taking.
A poor credit history doesn’t necessarily have to be a showstopper
Of course, it doesn’t necessarily have to be adverse products that offer a new revenue stream. What if your client wants to release some equity to help steady the ship in tough times? Fixed lifetime mortgages are another product that could be hard to place. Finding the right deal for your client will probably require a specialist lender.
But finding specialist lenders to take these more complex cases can be time-consuming. With rate rises in flux over the past 12 months and last minute product changes, it’s already hard to find enough hours in the day. So how do you find the time to scour the market trying to find that perfect product for your client?
Work smarter not harder
You may remember the old British Rail adverts that proclaimed ‘Let the train take the strain’. Well, in our line of business, it’s more ‘Let the tech take the strain’.
Products like Sourcing Brain are built with the purpose of making a mortgage adviser’s job easier. It’s packed full of time-saving features that will help quickly do the research that eats up chunks of your day.
Enter adverse credit details such as CCJs and arrears, missed payments, defaults, IVAs, individual voluntary arrangements, and bankruptcies as part of your product sourcing. Hit the results button and you’re presented with a list of lenders who you can place the case with. Simple.
Integrations
Sourcing Brain has the research tools you need, all under one roof. It simplifies everything from sourcing to submission through clever integrations with Criteria Brain, Affordability Brain and Hometrack.
All these solutions will save you some time throughout your busy day. You can take a 30-day free trial of these products and see for yourself. We think you’ll find you can’t live without them.
