A woman was left devastated after finding out an admin error with her water bill had affected her chances of securing a mortgage for her dream home.
Kelly Richardson explained “a lot of tears” fell once her mortgage offer had been pulled.
After years of renting, the mum of two started saving £44,000 towards a deposit on her forever family home. Kelly used a mixture of her own savings and a financial gift from her father, worth £9,000 to secure the property.
But her journey to homeownership was stunted due to ‘blips’ in her credit file.
Years before this, Kelly had received CCJ on her record due to a missed water bill payment, worth £706 which she wasn’t aware of. This was not her fault but instead an admin error with the missing bill being sent to the wrong address.
The CCJ was tied to the rental property Kelly moved out of in 2020 when her relationship ended, and this was placed on her record early 2021.
Kelly only found out about the CCJ on her record in February 2022, when she started saving to buy.
She said: “I’d moved into a new rented property, but the water company never joined up the dots, so I didn’t see there was a missing final payment to be made.
“It was really devastating to find out, as it completely wiped my credit rating which I was later told would severely impact my ability to get a mortgage via the high street.”
Kelly then went on to work with a mortgage advisor who pointed her in the direction of another lender who while initially approved the loan decision, pulled out altogether due to the style of the flat and entrance way.
She continued: “There was a lot of tears when that happened, my family and I have moved around so much, and we really just wanted to get settled as there’s been so much stress to get to this point.”
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Eventually, Kelly was referred to Together who quickly approved the loan of £126,000 on a first charge capital repayment basis over a 31-year term. This is on a five-year fixed product at a rate of 6.69 percent.
At the end of October 2022, Kelly Richardson (38 years old), bought and moved into her two-bed flat in Hayling Island, Hampshire. The flat is worth £170,000.
A third (30 percent) of UK adults have had a credit blip on their record in the past. And, while these are often everyday instances like a missed utility bill, rent, credit card payment and by simply being in an overdraft, this is causing real challenges for homeowners trying to secure a high street mortgage in the short-term, according to the latest research from Together.
Credit issues are having a knock-on impact to future property plans. A quarter (24 percent) are rethinking their future mortgage and property plans altogether, compounded by recent increases in interest rates and inflation.
What’s more, 64 percent of those who are not confident in being able to keep up with their mortgage repayments this year had a previous credit blip – compared to 32 percent without any blips – in a further indication of the increased awareness needed around mortgage application support.
Alan Davison, Personal Finance Distribution Director at Together said: “Would-be homeowners across the UK are being locked out of the mainstream mortgage market, simply because they have minor adverse credit of a few hundred pounds.
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“Banks and other high street lenders often stick rigidly to strict criteria and automated processes when deciding whether to approve a mortgage application, and credit blips – even if they’re historical and have been caused by a debt that has been paid off – can easily lead to rejection.
“With more borrowers likely to accrue blips in the current climate, it’s important to remember there are still specialist lenders out there who will still consider blips or CCJs on applications, so long as a clear repayment plan has been set up.
Mr Davidson explained that credit blips need not be the end of one’s homeownership journey.
He said if someone is faced with a ‘computer says no’ moment during a mortgage application, remember the following:
“Mistakes or errors on your credit file may be the culprit. Seek guidance from a mortgage broker who can help you understand your financial circumstances and recommend the best lender for you.
“Have an in-depth look at your credit score. You can safely obtain your credit report from reputable agencies like Experian, Equifax, or Trans Union to check for any discrepancies or unpaid bills. If you spot unfamiliar items, address them directly with the provider and resolve outstanding debts.
“Choose a lender who will help you navigate your specific circumstances. It is crucial to explore all options and work with professionals who understand your individual situation. Specialist lenders are a good option and can offer flexibility in considering credit blips.”
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