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Mortgage bloopers: "Borrowers pulling up in a brand new Porsche and failing to mention the £1400 monthly lease can be a big problem"

Journalist: Callum Mason, i

ended 07. October 2024

Brokers have identified the key mistakes borrowers tend to make when trying to take out a mortgage. They range from pulling up in a brand new Porsche with a £1400 lease, missed parking fines that have caused CCJs and people inflating their incomes, to using Klarna while an active mortgage application is in progress, taking out a credit arrangement for a relative and and believing it isn't their credit arrangement because somebody else is paying for it – oh, and forgetting that banks, well, tend to look at bank statements. The anecdotes and views of 12 long-in-the-tooth brokers, who have seen it all, can be found below.

12 responses from the Newspage community

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David Stirling
Independent Financial Advisor at Mint Wealth
Borrowers pulling up in a brand new Porsche and failing to mention the £1400 monthly lease can be a big problem. But trust me, it happens. More generally, the biggest oversights we consistently see from borrowers are on their income and expenditure, followed closely by credit history. Another is a recent repossession and bankruptcy or the fact that the borrower conveniently earns £12,000 per annum as a painter and decorator because their accountant told them to. It's often difficult to explain the underwriting process to someone desperate to buy a property. Emotions can run high when lifestyle mistakes are pointed out that can kibosh a mortgage application and someone's dreams.
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Elliott Benson
Owner at Sett Mortgages
One of the biggest mistakes borrowers make has to be bank account conduct. People often forget that bank statements will be looked at by someone at the bank. You really have to think to yourself, someone will be looking at these statements, will they be confident in lending money to me? So tons of Klarna and returned direct debits can be a big mistake. Secondly, not knowing your own address history. If you have moved addressess, please make sure you register where you are living and have proof of it before an application. This causes so many delays when people haven't updated their bank address since they lived with their parents ten years ago. Finally, not reviewing credit files before applying is a common problem. People sometimes forget about credit card balances and loans and there can sometimes be nasty surprises on a credit file like a CCJ from a parking ticket.
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Steven McKernan
Director at Castle Mortgages
The biggest error that borrowers make in my experience is the most basic one, and that's being inaccurate when it comes to their outgoings. Very often or not they will underestimate them or miss out outgoings altogether. People will often forget to disclose 'buy now, pay later' arrangements simply because they are not currently being paid. Another problem can be taking out a credit arrangement for a relative because of their poor credit record and believing it isn't your credit arrangement because somebody else is paying for it. People forget that it would flummox their own credit should the arrangement go unpaid. This is the same for loans taken out in personal names for the benefit of their limited company. None of these things are the action of a criminal at work but it could have implications on their mortgage application especially as product life cycles appear to be getting shorter.
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Adam Stiles
Managing Director at Helix Financial Partners
One major problem is borrowers who try hiding things or telling us what they think we want to hear rather than how things are. As brokers, we want it warts and all so we can make sure borrowers achieve their goal with as little stress as possible, the first time.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Some of the biggest mistakes borrowers make is taking out things like car finance prior to looking for a mortgage, not realising the huge impact those monthly credit commitments could have on their borrowing potential. Another common mistake is self-employed borrowers who do not know their accurate figures, do research online using their turnover not their declared profits for tax purposes to HMRC, which are often wildly different.
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Michelle Lawson
Director at Lawson Financial
One of the biggest mistakes is thinking a lender or broker won't find things out. We are all generally one step ahead of most things so with an experienced broker asking for documents upfront and the right questions being asked we can usually spot those. Trying to manufacture a situation rarely works and it is better to be honest. We are seeing a rise in monthly payments for items from clothes to cars: a lot of lenders don't just look at the monthly affordability but will also look at overall indebtedness against income. Also, late/missed payments or ignoring parking fines resulting in poor credit files regardless of whether the items are satisfied or not will impact mortgage options.
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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
One of the biggest mistakes we see is people using the likes of Klarna, and other "buy now, pay later" credit for fairly small amounts, whilst they have an active mortgage application in progress. Although it's unlikely to be a deal-breaker, we've had several occasions where the underwriters at lenders have come back to us to say that new credit agreements have been added and they need more info, which just delays things and also causes unnecessary stress for the applicants.
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Simon Bridgland
Director at Charwin Private Clients
One of the biggest mortgage bloopers borrowers make is inflating their income. This is often caused by lumping overtime or bonuses into the annual salary. Lenders like to break it down and will often not include the full figure of non-guaranteed income. Another is not declaring all existing credit. It's easy to forget about the little bit of finance you take out to pay for things, and while it can often be very small, it can easy to miss. Deductions on payslips are often overlooked, as payments deducted from gross pay such as a company car, healthcare or other benefits can be forgotten as they become part of the fabric of a borrower’s remuneration. Lenders will see these omissions when an application is submitted and then reduce borrowing accordingly. These types of errors can cause an insurmountable amount of pain when hopes are dashed of a purchase or remortgage. Check your credit file and look at payslips before making plans: you don’t want to have the rug pulled from under you.
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Justin Moy
Managing Director at EHF Mortgages
Typically it is paperwork-based or factual issues that make it hard to be accurate with borrowers about what they can borrow. Non-disclosure of important and expensive outgoings that seemed to have slipped the minds of the borrowers at the first interview, finding out their £65k income for last year was actually a £30k salary and commission, or they want to count a bonus earned at their previous employers when they have started a new job. Whilst we would spend a good amount of time with all clients about their ideas and needs, the supply of all documents upfront allows us to accurately determine someone's budget, before they have just fallen in love with the home of their dreams.
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Kylie-Ann Gatecliffe
Director at KAG Financial
One of the biggest issues we have seen recently is people making big financial changes to their situation just before trying to take out a mortgage. Changing your car may seem like a normal thing every few years, but that one monthly payment can hold heavy weight towards your borrowing power on a mortgage. We try to encourage clients to speak to us as soon as moving home is on their radar, so we can discuss borrowing potential early on. The other common theme we have definitely seen an increase in is clients making silly mistakes with their credit files, missing payments or ending up in arrears and not fixing it quickly are all much more common and can hold real weight when it comes to a buyer ending up with a competitive mortgage deal. We like to start working with clients early on in the process so we can try and help make any improvements to their situation that may be needed to get them with a highstreet lender rather than a more specialist more complex option.
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Dennigan Tyson
Mortgage & Protection Adviser at Pia Financial Solutions
The most obvious one is failure to declare things on bank statements. The amount of times I have seen payments to friends or family that are regular without being disclosed is untrue. Once, however, a client of mine decided to book a week's holiday to Dubai to propose to his wife, without telling me. This was around 4 weeks prior to completion of their new home and the bank asked a few questions of his repayment strategy as it wasn't' a cheap engagement. Thankfully we got it sorted, but it was alot of unnecssary stress that wasn't needed in addition to the proposal.
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Kim McGinley
Director & Specialist Broker at VIBE Finance
One of the biggest mistakes we often see as mortgage brokers is when borrowers become too focused on upfront fees, choosing solicitors or mortgage products based solely on price. While it’s understandable to want the best deal, mortgages are about much more than just the cheapest option: you need to consider the service you’re receiving, not only at the beginning but right through to completion. Other common mistakes include people not fully disclosing their financial situation, which can lead to complications further down the line, and relying on advice from friends or family instead of trusting their broker’s expertise. In the end, having the right support can make all the difference between a smooth process and a stressful one.