It can be more difficult to get a mortgage if you have had credit problems in the past but Chris and Tina’s situation was made even trickier in that Chris had not long since quit his job to pursue his hobby as a photographer as a new career.
In this case study, we discuss the importance of taking mortgage advice in Birmingham as early as possible to give your application the best possible chance of success.
Chris hated his job, but the salary was excellent, and he felt he couldn’t afford to quit. He started moonlighting on the weekend as a photographer, and he began to see this as a viable career in itself.
He eventually took the plunge into looking at self-employment mortgages in Birmingham, to improve his work/life balance and could finally enjoy his work.
With the additional hours he could now devote to his former “sideline,” Chris’s business quickly showed a profit. In fact, after the very first year of trading, it was profitable enough for him to consider buying a home for himself, Tina, and their children and get out of the trap of renting.
Sadly, finances have never been Chris’s strong point, and his negligence on such matters when he was younger led to a couple of defaults on his credit record. His credit score had improved in recent years, but the old defaults were still showing on his credit report.
Therefore, there were two issues at hand when the customers approached our Mortgage Broker in Birmingham for Mortgage Advice.
These appeared to consist of finding them a Lender who would take a more forgiving view on his historic poor credit while also lending to him based on the year’s trading figures.
Chris knew he would not be an easy mortgage and took the sensible step of engaging with us early on, well before they started viewing houses. He felt that getting a mortgage might even be impossible.
Looking at Chris’s Experian report, it is evident that a specialist lender would be required. Luckily his photography business didn’t need much cash to get going, and he had been quickly able to raise a 15% deposit with just a little help from the “Bank of Mum and Dad.” giving me the reason for some optimism.
Some of the less well-known “specialist” Lenders have carved out a real niche for themselves when it comes to lending to customers who have not long been Self-Employed In Birmingham.
There is some additional risk for them in this area when so many businesses go bust in their infancy, thus to mitigate this, they insist customers put down a fat deposit. 15% was just enough, and we obtained an Agreement in Principle for Chris and Tina, who went on to buy a family home.
Because these specialist lenders are working in carefully selected niches, they tend to charge higher rates of interest than you might see advertised with High Street Banks.
That said, these higher rates are by no means extortionate, and in many cases, it’s still cheaper than renting.
Just because your first mortgage ends up being with a specialist Lender, it doesn’t mean that you are frozen out of more competitive mortgage rates forever.
While it’s likely that you’ll have to sign in for at least two years, if you can prove a good payment history, then a remortgage to a more well-known Lender offering a better deal after a while should be achievable.
Specialist Lenders don’t mind you seeking another deal elsewhere, and they expect that’s what will happen in a large number of cases.
They see themselves as “stepping stone” Lenders, and when you come to leave them in the future, they simply take the funds you have repaid and look to lend it back out to new customers.
In a nutshell, specialist Lenders play an instrumental role in the mortgage market. They will take a different view to mainstream Banks, but don’t get fooled into thinking they lend to just anyone, and you have to fit precisely within their published lending guidelines.