press release

MORTGAGE applications are now likely to be rejected out of hand unless the borrower provides an impeccably presented application with all supporting information and a seamless credit history, warns Moneynet.co.uk..

As the credit crisis deepens, the online financial data comparison site today advises would-be borrowers that they will need to check and double check their applications if they are to stand a chance of getting a mortgage at competitive rates – even if they have had no difficulties in the past.

“With mortgage lenders swamped by demand and under increasing pressure to clear the backlog, incomplete or inaccurate applications are likely to rejected out of hand,” he says.

“Borrowers will have learn how to present their cases to the lenders, and it will no longer be good enough to submit an application with half the information missing.

“With a predicted 30% shortfall in available mortgage funds borrowers need to understand that they are now in competition with others. The successful applicants will be those who make the best job of selling themselves to the lender.

“First Direct this week revealed that it was taking a couple of weeks simply to acknowledge mortgage applications, which is one of the reasons it has closed to new business for the time being,” he adds.

Mortgage borrowers looking to switch existing loans or those new to the market will now have to think like brokers in order to be in with a fighting chance of a loan, he advises.

“Brokers know the form and the good ones have learnt the art of presenting an application in the best light to maximize their chances of success – but now those applying directly are going to have to take a little more time and care over their applications,” says Brown.

“’Borrowers need to be aware that mortgage finance is likely to be in short supply for a time, meaning that the lenders can now pick and choose who they lend to. To succeed in this market, borrowers should be making it easy for the underwriter to say yes rather than no.

“Remember that lenders will be looking for an excuse to decline a percentage of the business presented so my advice is not to give them that chance’’

Among the most vulnerable borrowers are those who have irregular incomes, are in short term contract arrangements, or have any history of adverse credit.

“Welcome to the new lending universe – the rules have changed. Barely a couple of months ago lenders were fighting each other for custom,” says Brown. “That has all gone. Banks and loan firms are only going to lend to those who they are sure can repay.

Follow our guide and you’ll be in with a good chance. If not, forget it,” is Brown’s stark warning.

Wise up in credit crisis - Moneynet.co.uk top ten borrowers’ tips

1. Present your application fully completed with all relevant information
2. Provide a supporting letter explaining any unusual circumstances
3. Get a copy of your credit report and make sure your information matches the report - if not, provide reasons for any discrepancies
4. Be realistic with your expectations – any unusual aspects to your application may mean paying a premium on the rate
5. If your income is irregular or from multiple sources provide evidence going back as far as possible and as much reassurance as possible that it will continue
6. If applying for a high income multiple provide a realistic budget planner with as much detail as possible
7. If you have other assets then provide full assets and liabilities statement with your application
8. If there is any history of adverse credit or missed payments provide a full explanation of circumstances which should include a realistic explanation as to why this won't happen again
9. If re-mortgaging and a high LTV is required make sure that property is presented in best possible light when the valuer visits to maximise your chances of getting highest possible valuation
10. If problems are severe consider using a mortgage broker, even if this means paying a fee. A good broker will be experienced at presenting your case in a good light and will have contacts with lenders who may be sympathetic. In addition, they will have leverage with the lenders who may be keen to retain other business from the broker

* BBA/BSA data, April 2007