Majority of ‘non-standard’ borrowers still denied mortgages
Research by Together has revealed that more than half of borrowers have been denied a home loan for being considered ‘non-standard’, including being self-employed or buying a converted home.
Together’s study surveyed about 2,000 people about mortgage applications and the reasons why some of them had fallen out of the mortgage application process.
Of the 54% who had been rejected, 12% were denied because of their employment type, while 3% had insufficient employment history.
10% were denied because the property they wanted to buy was considered ‘non-standard’, which could mean anything from a converted barn to a high-rise apartment.
Millennials were worst hit overall – with two thirds who took part in the survey failing to get on the housing ladder because of the way they live and work.
46% of over 55s were also denied home loans, some because they were too near retirement age.
Additionally, nearly one in five (18%) people who took part in the Together survey were turned down because they had a low credit score or a lack of credit history.
Just 9% said they’d been turned down because their deposit was too small and 16% said they were not earning enough to afford repayments on their home loan.
Over a quarter (27%) of rejected applicants who did not obtain a subsequent mortgage said they were put off ever going through the process again, rising to 32% for over-55s.
A disappointing 28% who were originally unsuccessful have still not secured a mortgage.
Pete Ball, personal finance CEO at Together, said mainstream lenders need to keep pace with the demands of these types of borrowers and ditch their reliance on a computer-automated approach with outdated and rigid criteria.
Pete commented: “The world has changed. People’s pay, working patterns and pensions have altered beyond all recognition from 30 or 40 years ago. Even where they live, who they chose to live with, or the type of property they want to buy is vastly different from a generation earlier.
“What was previously thought to be ‘normal’ simply doesn’t exist anymore.”
Coreco’s Andrew Montlake added: “Across the country, people are living and working longer and have varying ideas of what their perfect home will be at different stages throughout their lives.
“Unfortunately, much of the mainstream mortgage market has been slow in catering for these potential borrowers, who make up a wide section of society. The market needs to continue to adapt to make sure it remains fit for purpose.”
Source: Financial Reporter