Common client advice

"The most difficult explanation I find myself giving to clients is around a lender's internal credit scorecard. This lovely old reason for decline is the bane of mortgage brokers' lives. As brokers, we can spend hours completing full affordability assessments, checking criteria, ensuring the client's credit file and financial history meets the lender's policy, complete the Decision in Principle application and be declined, due to not meeting 'the internal scorecard'. Basically, computer says no. I then have to explain to my clients why the deal I have so carefully researched and recommended is no longer an option, and the worst part is I can't even tell them why. Lenders confirm they cannot disclose where the application fell short of meeting their 'scorecard' even though the application meets affordability and criteria. Thankfully I don't come across too many of these, and most lenders have a soft footprint on credit file search so once explained to the client, it's onto the next best mortgage deal."

"The most confusing part of the mortgage process tends to be affordability, especially when a client is paying £900 per month for rent, but a lender says an £800 mortgage is unaffordable. It's then a case of having to explain the way that the regulator views lenders and we have a discussion about stress testing, which with rates rising, is actually an easier conversation to have now. Second to that is the dark art of credit scoring; explaining to a client that's just failed the lender's credit score that the 998 score on their Experian app means nothing to a lender is always an interesting chat."

"The area I've recently found myself explaining over and over again is what happens when a property gets downvalued. I try not to focus on it too much when going through the ESIS but just let clients know it is not the end of the world. Only when it happens do we go through the options. Sometimes you do wince, though, when your client says they are happy to pay way over the valuation just to get the property. I'm talking tens of thousands over, and not in poshville areas of the south east either, but in Greater Manchester."

For me the most common misunderstanding, whether deliberate or innocently is around a good credit file. How people manage their credit makes a huge impact on lenders, one little "blip" can create Armageddon for the client, I now do not entertain a client without a full credit report. Lots of people think the score is important and whilst it does assist, if they have any missed payments, historical debt issues or a CCJ for a parking ticket. It will seriously have an impact on loan to value, the interest rate that will be offered and the amount of lenders available to them in the market place.