Why a credit blip doesn’t need to spoil homebuyers’ festivities this Christmas

This article was supplied by Precise Mortgages

The run-in to Christmas is usually a time when our thoughts turn to how we can spoil our loved ones by showering them with gifts.

But after a year which saw the bank base rate hitting its highest level since 2008 and inflation remaining stubbornly high, it appears as though many festive shoppers are planning to tighten their belts and rein in the celebrations.

It’s predicted that Britons will buy fewer and cheaper presents this Christmas, with the cost-of-living crisis forcing many people to either cut down on the number of gifts they buy or to look for bargains to try and save a few pounds.

According to the latest research from retail analysts Global Data1, higher prices in the shops and online means people will spend less in real terms compared with 2022. And with the savings built up during lockdown now largely depleted, it’s likely consumers will be looking to shop more cautiously and savvily in the coming weeks.

Perhaps it’s not surprising when you consider that a record number of households are already seeking help for energy debt before winter even hits.

Citizens Advice is reporting that nearly eight million people had to borrow money to pay their energy bills in the first half of 2023, with the charity warning that millions are facing a winter as bad, or even worse, than last year2. Despite an estimated fall in the energy price cap, the average household can actually expect to pay slightly more this coming winter than they did between January and March 2023, if current forecasts hold.

What’s more, Which? has found that many people are already struggling to keep up with repayments.

In its latest Consumer Insight Tracer, the organisation discovered that 2.4 million households had missed essential bill payments, with 1.5 million doing so on household bill payments, such as energy, water or council tax. Worryingly, nearly two-thirds (65%) of households reported they’d missed more than one household bill payment3.

So, with the nights drawing in, temperatures starting to fall and no end in sight for the current cost-of-living crisis, we could soon see more people struggling to pay their bills and ending up with a black mark on their credit record.

It all means that many people looking to buy a home may struggle to secure a mortgage, particularly if they’ve got an impacted credit profile.

How Precise could help

Fortunately, we don’t believe that a credit blip should prevent a customer from getting a mortgage.

We’re always looking for ways to help borrowers underserved by mainstream lenders which is why we’ve expanded our residential product range. Our criteria is designed to help those with adverse credit profiles who may have been turned away by the high street.

Our range includes two and five-year fixed rate options for customers with recent CCJs, defaults, secured and unsecured arrears, as well as active and satisfied debt management plan (DMPs).

• 5 defaults and 3 CCJs in the last 24 months accepted
• Defaults and CCJs don’t need to be satisfied and there’s no upper limit on the value
• Active and recently satisfied debt management plans (DMP) accepted with affordability based on the reduced DMP payment amount if the DMP will remain active after completion
• Mortgage, secured loan and rent arrears – 1 in 12 months, 3 in 36 months (worst status)
• Unsecured arrears are not counted but may affect credit score
• Historic pay day loans can be considered
• Capital raising for any legal purpose, including debt consolidation, up to 85% LTV accepted

And finally, why not take advantage of our automated cascade system, where cases are filtered until an appropriate product is found, without the need to reapply. It’s a real time saver, especially with more complex cases.

If you’ve got any questions or need a little help with placing your cases, chat with a member of our sales team, call our dedicated support service on 0800 116 4385 or speak to us using Live Chat.

Adrian Moloney is group intermediary director at Precise Mortgages

^{FOR INTERMEDIARIES ONLY}

^{Correct as at 08/11/23}

^Sources:

^{1 https://www.globaldata.com/media/retail/uk-christmas-retail-growth-at-3-4-in-2023-to-fall-short-of-last-years-increase-says-globaldata/}

^{2 https://www.citizensadvice.org.uk/about-us/about-us1/media/press-releases/record-numbers-seek-help-for-energy-debt-before-winter-even-hits-citizens-advice-warns/}

^{3 https://www.which.co.uk/news/article/cost-of-living-crisis-2.4-million-households-miss-essential-bill-payments-alAn85M35bYq}