There was a time when no meant no, but sadly that is not the case anymore. I am talking specifically in relation to mortgage applications.
When I started my first role at Cheltenham & Gloucester in 1999, it’s fair to say that we only declined cases that we truly could not help. We explored all avenues. I think it is fair to say that is generally how most of the major lenders worked as well at that time. So as a result, the application process was often quite slow and cumbersome. Every document (often posted in at that time – remember doing that?) was manually pawed over.
Flash forward to 2020 and the world is a very different place. Being a London Mortgage Broker now, I have seen the pace of processing of mortgage applications is not only much faster and slicker. (Indeed, many remortgage applications can be offered now in 24/48 hours if packaged correctly. This is due to automated income checks and desktop valuations). But expectations are much higher. This perversely has led to more applications being declined than was previously the case.
Lenders have got cute to publicising their ‘time to offer’ speeds with mortgage brokers. Overall this is something I applaud. (And it always tells its own story when lenders are not open on this point). However it does have a downside. Lenders are now quicker than ever to decline cases. If they don’t, it adversely affects this metric.
Just last week we saw a case where one the largest lenders in the UK (and overall, an excellent bank) simply missed a £45,000 bonus that we had input on the application. The case was declined. This was 100% the bank’s fault. The right data was input by us and the right documents uploaded. It’s not the end of the world as we have to simply re-key the case. (As we have well learnt by this stage, there is no point having a 3 day argument with a bank to get the decision overturned when we can get the work done in an hour or two). To be blunt, its what we get paid for – making things run smoothly for our clients – so no drama.
Re-presenting mortgage applications
However, we are talking to more and more clients who are having this experience when they apply to a bank directly. They get rejected and come to us to find a new lender. Clients don’t know this dynamic exists and are often very anxious by the time they speak to us.
I have literally lost count of the times we have re-presented the application to the very same lender the client was rejected by. Only to get a mortgage offer produced, as we know the system. To add insult to injury, we often also get a lower rate. As with lenders like Halifax, NatWest, Nationwide and many others, it is cheaper to come through a mortgage broker, than it is to go to them directly.
Increased chance of success
This anecdotal evidence is supported by research, from the IMLA (the Intermediary Mortgage Lenders Association). The IMLA’s stats in Q1 2019 evidenced that 89% of broker applications went to offer, which is up from 76% in Q1 2016. It just shows how much more professional the mortgage broker industry is now and just how valuable it is to enlist the help of one when you next need to source a new mortgage. Whether it be a for first time buyers, home movers, remortgage or Buy To Let. As you’ll see from the research, every aspect of lending is greatly improved by having a mortgage broker on your side.
Application declined – not the end of the road
People often come to a mortgage broker to source the best rate, or their situation is complex. We love that work. However, as the research shows, even for the most vanilla of applications, mortgage brokers can offer great value. In getting the application done quickly and cleanly, removing any stress before it even happens.
So the moral of the story is. If you have, or ever do get a mortgage application declined, do not accept that as the end of the road. Speak to a broker who can correct the situation and possibly even get you better terms in the process.
There are over 200 data points per mortgage application. So it is no surprise things go wrong. So it is key to having someone in your corner who is acting for you at that stage, and not a lender simply trying to get their ‘time to offer’ down by kicking out your application!