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If you have ever wondered why to bother spending money on a mortgage broker, the answer has been plastered all over the papers this week. The Financial Conduct Authority (FCA) is planning an investigation into unfair mortgage rejections amid concerns that lenders are using rules introduced in April 2014 to freeze perfectly responsible borrowers out of the market. Particularly affected are older customers, and women of childbearing age.
The Mortgage Market Review (MMR) of last April was designed to prevent a repeat of the 2008 financial crisis, when the economy was almost brought to its knees by a series of defaults. Lenders are now required to conduct in-depth ‘affordability’ checks to stop banks offering mortgages to anyone who will struggle to pay it back.
So far so good. But Islay Robinson, CEO of Enness Private Clients, says that many banks following the MMR’s rulings are ignoring additional regulatory guidance to use their discretion in certain situations. As a result, credible, responsible customers are being rejected by these lenders’ computer algorithms, which fail to take specific or unusual circumstances into account. Even more concerning is the suggestion that some lenders are unfairly profiting by using the MMR to prevent customers from moving to cheaper loans.
Older borrowers are reporting that they have been denied loans that would stretch into their retirement, even if they can demonstrate a watertight repayment plan. A recent survey by uSwitch suggests that one in ten women aged between twenty-five and forty-five has faced ‘mortgage discrimination’ on the basis that childcare expenses could affect repayments.
According to Mr Robinson, it’s not just first time buyers who are vulnerable; whether you want to move house, purchase a buy to let or remortgage, the current market is a minefield. The range of products available has recently broken the 15,000 mark for the first time since 2008, which makes it easier than ever to choose poorly. In fact, as we are seeing, it is almost impossible for borrowers to emerge unscathed – that is, without some help.
The best strategy is of course to find a broker – but not just any broker. Getting the wrong mortgage is a very expensive mistake to make, but engaging the wrong broker can leave an equally large hole in your pocket. The services of someone independent and informed, who will scour the market in its entirety to find you the best possible deal, are invaluable.
Most brokers rely on receiving commission from lenders, and are therefore severely limited in what they can offer to customers. At Enness, our fee structure means we can use lenders whether or not they pay us commission; we have access to a smorgasbord of deals and long-standing relationships with every lender in the UK.
If there is anything remotely complex about your situation – if you’re self-employed, using bonus income or nearing retirement – it’s more important than ever to get a quality broker on your side. At Enness we know exactly which lenders to approach and how to present your case; and if we’re in your corner, you won’t be at the mercy of lenders’ algorithms anymore.
If we’ve learnt anything from the FCA’s plans, it’s the importance of using a good broker. Our vast experience of every type of case will save you the hassle of unfair mortgage rejections; we will sort through the huge range of products on the market and find you the best possible deal; and we are completely and utterly on your side. Give us a call today or have a look at some of the services on offer at Enness to find out more.