"Many of these borrowers may feel unable to move and stuck in a negative cycle where their credit score is having an impact on their ability to secure a mortgage."
The challenging events of recent years mean it’s now becoming increasingly common for mortgage brokers to come across a borrower with one or two blips on their credit record during the advice process.
Many of these customers will need some help remortgaging or moving home and may have encountered barriers when applying for a mortgage or been turned down for borrowing by high street lenders.
In some of these cases, this may have prompted the customer to believe they are unlikely to secure a mortgage until their credit history improves and they have a clean sheet.
Yet in some of these cases, a credit default or missed payment can often be an issue that temporarily got out of control rather than a tendency towards debt. This could have been due to a change in personal or employment circumstances or perhaps as a direct result from the pandemic or the cost of living crisis.
Many of these borrowers may feel unable to move and stuck in a negative cycle where their credit score is having an impact on their ability to secure a mortgage.
Looking beyond the headline credit events
Helping these borrowers must be a priority, which is why getting to know the reason behind the default can prove to be a much better approach than simply focusing on the headline criteria.
Not only does this enable brokers to understand the clients’ circumstances, it could also enable them to secure the best deal for these clients and help them get their finances back on track.
While credit blips and adverse credit records are often associated with the specialist lending market, the fact is that building societies, like Mansfield, can be well-positioned to help these clients. We provide solutions for clients with a slight blip on their credit record who may find themselves in an unusual and temporary situation, rather than a permanent one.
Our credit repair mortgages, for example, have been designed to help borrowers who would typically fail the credit checks of mainstream lenders because they have experienced credit problems.
This includes those who may have a history of missed payments, defaults, CCJs or even bankruptcy. They are also available to borrowers who may be currently seeking relief through active debt management plans (DMPs).
In some of these cases, these clients will have been turned away by the big banks because they do not fit the one-size-fits-all lending criteria used to determine a client’s suitability for borrowing.
Flexible and straightforward solutions
At Mansfield, we recognise credit scoring models can be a barrier for many customers and aim to support these underserved borrowers get back on track. By providing accommodating criteria and personalised underwriting, we believe our approach can empower these borrowers to move forward with flexible ways to manage their finances.
Our credit repair proposition is available up to 70% LTV and can include capital raising, transfer of equity and debt consolidation.
With the ongoing strain on household budgets due to higher living costs, there is a growing need for lenders to adopt a more compassionate approach to help borrowers navigate these financial difficulties.
Mansfield’s credit repair proposition aims to provide not only a straightforward solution to these challenges, but also the ability to help these borrowers get back on track as smoothly as possible.
