With more and more people struggling financially and unable to pay all the bills, whether due to the pandemic or ongoing cost of living crisis, brokers have revealed who the best lenders are for borrowers with blips or more serious credit issues.
The conclusion is certain smaller building and friendly societies, and specialist lenders, which take a much more manual approach to underwriting. The high street, in contrast, is often best avoided.
Paul Neal, director at Derby-based broker, First Choice Financial Services, said: “The credit-impaired market is going to be a rapidly growing one in the years ahead as the fallout from the cost of living crisis continues and higher mortgage rates hit household finances for six. More and more people are now struggling to keep up with their bills and mortgage repayments.”
David Sharpstone, director at Braintree-based independent mortgage broker, CIS Mortgage Advice, said borrowers with credit issues need to go to lenders with a more human approach: “It’s vital that credit-impaired borrowers have access to lenders that take a more human response to underwriting and do not rely on a minimum internal or external credit score pass. I’m a big fan of Kensington lately.
“Their processing times are in line with many of the big high street lenders and have a great degree of flexibility with credit blips. The small building societies and friendly societies have a huge role to play in this market, too, in particular where there may be small yet historic credit blips. The gatekeeper systems used by bigger lenders would automatically decline these borrowers.”
Jamie Alexander, director at Alexander Southwell Mortgage Services, agreed: “Borrowers with impaired credit need to find lenders who adopt a more personal approach to underwriting, particularly those that don’t depend on meeting a minimum internal or external credit score threshold. Lately, I’ve been impressed with Kent Reliance and Pepper Money. Their processing times are competitive with major high-street lenders, and they show considerable flexibility in dealing with credit inconsistencies.”
According to Darryl Dhoffer, director at Bedford-based The Mortgage Expert: “If we are looking purely at rates, then the likes of Loughborough Building Society and Buckinghamshire Building Society are in the vanguard of credit-impaired lenders.
“As for the Big Six, most will require six years of financial penance before they go anywhere near you. Meanwhile, the likes of Accord, Coventry BS and Leeds BS are shocking and will only look at an ex-IVA case 12 years after first registration. It’s like they’ve thrown away the keys on borrowers.”