Applying for a mortgage involves
jumping through a lot of hoops – and, as one couple discovered, small
blips in your financial history going back many years can derail an
application.
Whenever a mortgage application is made, the lender runs a detailed credit check on the applicant, looking back at their credit history for the past seven years.
The aim is to establish whether an applicant is a safe bet, based on the level of responsibility displayed in their history of servicing and repaying debts.
When it comes to mortgages, because of the large sums involved, even small inconsistencies can be a red flag for lenders.
With a £50,000 deposit on a £299,000 house, and stable combined salaries of £55,000, all the signs looked promising.
Mr Corcutt, who works in business development, said: “We went through a mortgage broker, who initially gave us a list of loans we could look at, so we knew what we could borrow and what we could afford.”
After looking at some properties, the couple put down an offer on one they liked. When it came to arranging the mortgage, however, the provider they had earmarked as a potential option declined them on the basis of Mr Corcutt’s credit history.
“After being rejected I went to find my credit report to find out what the problem was – the lender had told me it was something on my record, but didn’t say what,” Mr Corcutt said.
“I managed to track it down and work out what it was. When I was at university I had a credit card, and I was waiting for a maintenance loan to come through so didn’t make some payments.”
Although they were able to get a mortgage in the end, Mr Corcutt said the experience was “extremely frustrating and in the end it did mean we got a slightly worse rate”.
When a borrower has been rejected by one lender, there is always the risk that others might follow suit. The first mortgage application involved a “hard” credit check which led to a rejection, something that can in itself affect a buyer’s ability to borrow.
A hard check is a type of inquiry that can have a direct impact on an individual’s credit score.
Whenever a mortgage application is made, the lender runs a detailed credit check on the applicant, looking back at their credit history for the past seven years.
The aim is to establish whether an applicant is a safe bet, based on the level of responsibility displayed in their history of servicing and repaying debts.
When it comes to mortgages, because of the large sums involved, even small inconsistencies can be a red flag for lenders.
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With a £50,000 deposit on a £299,000 house, and stable combined salaries of £55,000, all the signs looked promising.
Mr Corcutt, who works in business development, said: “We went through a mortgage broker, who initially gave us a list of loans we could look at, so we knew what we could borrow and what we could afford.”
After looking at some properties, the couple put down an offer on one they liked. When it came to arranging the mortgage, however, the provider they had earmarked as a potential option declined them on the basis of Mr Corcutt’s credit history.
“After being rejected I went to find my credit report to find out what the problem was – the lender had told me it was something on my record, but didn’t say what,” Mr Corcutt said.
“I managed to track it down and work out what it was. When I was at university I had a credit card, and I was waiting for a maintenance loan to come through so didn’t make some payments.”
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Although they were able to get a mortgage in the end, Mr Corcutt said the experience was “extremely frustrating and in the end it did mean we got a slightly worse rate”.
When a borrower has been rejected by one lender, there is always the risk that others might follow suit. The first mortgage application involved a “hard” credit check which led to a rejection, something that can in itself affect a buyer’s ability to borrow.
A hard check is a type of inquiry that can have a direct impact on an individual’s credit score.