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Quarter of ‘non-vanilla’ borrowers declined for a mortgage

Paloma Kubiak
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Paloma Kubiak

Borrowers who are either self-employed, have a blip in their credit file or have no credit history at all are being turned down for mortgages.

Nearly a quarter (23%) of non-vanilla customers have been rejected for a mortgage, with the majority (84%) declined by high street banks, while nearly a quarter said they were declined by their main bank.

But of those who were rejected, 88% said they received advice on ways to secure a mortgage, according to a survey conducted by Bluestone Mortgages.

It found the most popular advice was to try another lender, with 82% recommended to do this. Some 13% were told to speak to a mortgage broker and of those who did, 98% managed to get a mortgage. 

Steve Seal, chief executive of Bluestone Mortgages, said: “What is crucial, is the fact that those who have been rejected by a high street lender or their main bank have been able to secure a mortgage once directed to an alternative lender who suits their borrowing needs.  

“This demonstrates the importance of signposting, and the mortgage industry as a whole has a vital role to play in this.” 

Excluded from other financial services

Non-vanilla customers are also being turned down for other financial products, with a third being rejected for credit cards, and 12% being declined for a loan. 

Overall, 44% of the 1,004 respondents said they had been declined a financial product or service by a high street lender. 

Those who have had their credit score impacted by a missed payment were most likely to be turned down, the research suggested. 

According to responses, 88% of people with a missed payment were unable to get a financial product or service from mainstream lenders compared to 28% for self-employed customers. 

Younger customers are also more likely to be rejected, with two-thirds of those aged between 18 and 34 being turned down compared to 55 per cent of those aged 35-44 and 13% of customers aged 55 and over. 

‘Don’t give up on your dream’

Seal said it was “discouraging” to see how many people were being turned down for financial products and services. 

He added: “In an environment where inflationary pressures continue to mount and the cost of living is rising, the number of customers who do not fit the ‘vanilla’ profile is only set to grow. 

“Our message to borrowers is don’t give up on your dream, there are options out there to help ensure each and everyone has equal access to homeownership.”