1 in 10 mortgage applicants rejected after loan repayment holiday
One in ten mortgage applicants have been rejected by lenders because they had taken advantage of a past loan repayment holiday, according to new research from NerdWallet.
The financial comparison platform commissioned an independent survey of over 500 UK mortgage holders. It found that on average, prospective applicants dedicated 22 hours to researching mortgage options, and spoke to just 2 lenders before applying.
However, 12 per cent of mortgage holders had an application rejected in the past, despite receiving a mortgage in principle from the same lender.
A further 10 per cent of applicants say they have been rejected because they had taken advantage of loan repayment holidays. The same number (10 per cent) faced rejection because of pre-existing debt, while 8 per cent have had an application rejected in the past because of their credit score.
However, 9 per cent of applicants had their application rejected without knowing the reason why.
Elsewhere, NerdWallet’s research showed that almost half (48 per cent) of mortgage customers found the application process stressful, with 50 per cent calling upon the help of a mortgage broker.
John Ellmore, director of operations at NerdWallet, said:
“The UK’s property market has bounced back strongly from the initial lockdown period, with house prices and transactional activity rising sharply. However, the pandemic and subsequent recession might have made mortgage applications more strenuous for prospective homebuyers as lenders tighten their criteria. This can be incredibly frustrating for mortgage applicants – especially when they are rejected for reasons that are largely beyond their control or simply unknown to them.
“Indeed, applicants who have taken advantage of loan repayment holidays as a consequence of the financial pressures caused by the pandemic may well find themselves unfairly targeted, given use of such schemes was not meant to impact on their ability to access credit in the future. Our research shows that the mortgage market can be difficult to navigate, underlining the importance of thorough research and preparation. Taking time to speak to multiple mortgage lenders and comparing different options online, for example, could save people time and effort when it comes to the actual application process, ensuring they do not pursue unrealistic or inappropriate options.”
Kindly shared by Property Wire
Main photo courtesy of Pixabay