New typologies unveil reality of getting a mortgage. The research into the nation’s perception of owning a home, conducted by Online Mortgage Advisor, revealed that the failure associated with being declined a mortgage would make a fifth of Brits think twice about trying!
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Property-focused Brits see owning a home as the pinnacle of success, with 41% saying that being declined a mortgage is an embarrassing secret that means they’d failed in life.
Forget bagging the dream job or paying for children’s education as indicators of success, the nation places so much value on owning property that millions think being declined a mortgage would be worse than missing a promotion at work (13%) or being dumped (11%).
The research into the nation’s perception of owning a home, conducted by Online Mortgage Advisor, revealed that the failure associated with being declined a mortgage would make a fifth of Brits think twice about trying!
David Bird, Online Mortgage Advisor, Director, says: “Despite the value placed on owning a home showing no sign of changing, there are still major misconceptions about mortgage eligibility.
“Our research showed that people are avoiding pursuing their dream of getting on the property ladder because of outdated myths about what it takes to get approved.
“With 35 per cent assuming they’re not eligible or don’t earn enough and 33 per cent finding the process and advice confusing, and stressful, it’s fair to presume that a huge amount of people who could potentially own a property, are discounting themselves without even trying!”
One of the drivers of this trend is the fact that there are rapid changes in the world of work. While businesses look to embrace the fourth industrial revolution, globalisation and a growing gig economy, the way Britons make money is more varied than ever before.
When it comes to trying to get a mortgage, people living a varied working life might feel like a minority; but they’re a fast-growing minority and are leading the way for the rest of the country.
A common example is people who are self-employed – that’s over four million people in the UK today – many of which mistakenly think their varied income or lack of three years’ worth of accounts means they automatically don’t meet requirements for a mortgage.
David Bird, Online Mortgage Advisor, Director, continues: “No longer does everyone aspire to a nine-to-five with good benefits; a lot of people want to work for themselves, or for a variety of employers, choosing where and when they earn their living.
“Despite this fantastic pace of change, unfortunately, the mortgage advice market hasn’t necessarily kept pace with these key economic and social developments.
“Advice varies enormously between brokers and criteria varies significantly from lender to lender. When one person goes to a broker that fails to secure a mortgage or applies directly to the wrong lender, they presume this goes for everyone and tell their friends and family so.
“Of course, there will still be some people who will face challenges for one reason or another, but the key to truly understanding your eligibility for a mortgage is getting the right advice for your situation.”
Online Mortgage Advisor connects customers with specialist advisors who have the right experience helping people who have been in similar circumstances. With its experience of working with people who may have previously been declined or faced difficulties, and to encourage more consumers to consider getting on the ladder, Online Mortgage Advisor has identified five audiences that represent some of the most common situations. These typologies may assume they won’t ever qualify for a mortgage – but actually could.
1. The entrepreneurs: hard work has achieved business growth but reinvestment into the business means income showing on the business owner’s most recent set of accounts looks lower than expected and lower than previous years. Even though the business owners could have paid themselves more, the choice to pay themselves less in salary and dividends has limited their mortgage opportunities with most lenders.
2. The flexi crowd: self-employed with a variable monthly income or perhaps someone who is new to self-employment who has less than two or three years’ accounts. These factors fall outside of the majority of lenders' criteria.
3. The globe trotters: those returning from time abroad may have a lack of searchable addresses, which can cause issues. As well as this, gaps in their credit history, income and employment history can also cause problems.
4. The financially unfortunate: previously stuck in a joint mortgage with an ex-partner who wouldn’t contribute, leaving you to default on payments has left you both with a bad credit record. Or, someone who has been out of work due to ill health or redundancy which has led lenders to raise concerns due to resulting poor credit.
5. The maternity leavers: halfway through maternity leave you need to remortgage but earnings only show statutory maternity pay. Many lenders will only consider an application when you’re back at work.
For real life ‘flexi crowd’ blogger Naomi Willis, the idea of a mortgage seemed an impossible task. Naomi says: “My husband and I guessed we couldn’t get a mortgage because we had a new business and some poor credit history. On paper, we were not mortgage material.
“It always felt easier and safer not to bother applying until we were ready – out of debt and back on track. However, to my surprise, my presumptions were proved wrong recently as we discovered that we are eligible, and we could be homeowners sooner than we thought.”
Naomi and Ricky who run the Skint Dad personal finance blog recently reviewed the life-changing service they received when they called Online Mortgage Advisor. What was previously a five-year plan to get a mortgage, has turned into immediate action to get a mortgage in the coming months!
To be passed to the right broker for your situation visit www.onlinemortageadvisor.co.uk or call 0800 304 7880. You can also find more information and read more about the typologies, case studies on the Online Mortgage Advisor Mortgage Matters blog.