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  • Mortgages & Finance

    Failing Credit Check and Car Finance

    Good afternoon,

    I currently have 9 BTL mortgages and applied for another today and unfortunately got declined due to an internal credit score. I have no adverse credit whatsoever - but said I would get accepted at a lower LTV, so I've gone for that. I've been told that it's because of the amount of credit checks that I've had over the last 12 months - most for mortgages / other purposes?
    How do big-time landlords cope if I am being rejected due to credit checks?

    I am looking at financing a new car (circa £80k) and I am concerned that this will impact my ability to gain BTL mortgages. I was always under the impression that BTL lenders didn't take this stuff into consideration?

    Thanks

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    An interesting conundrum.

    Firstly, you have correctly identified that it is the credit score, and not the credit check (two different things) that has possibly affected your application for a mortgage - although if this is the case then you'll be pleased to know that there are several lenders who do not credit score at all, so maybe you should look at their product options too.

    A car finance application will temporarily reduce your credit score further.  Yes, BTL lenders do take this in to consideration.  Especially if your portfolio is highly leveraged and the risk to the lender is greater due to a low ICR and high LTV.  They will also look at your 'other' occupation and income and possibly assets and liabilities as well. The world for portfolio landlords has changed.

    A specialist BTL Broker can help.

    Contact the Team at Property Tribes Financial Services anytime to review your options from across the market.

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    Hello

    If a lender relies on a scoring system, it’s unlikely they will be able to tell you why you failed scoring specifically as an algorithm determines your score.  The info you have been given re credit checks is more likely an observation about what they think may be an issue.

    High levels of unsecured borrowing can make a real dent in your scoring so it may be the car loan which is the issue.

    We have landlords with over 100 mortgages (and are constantly applying for credit) so I really don’t think it’s the number of searches which is your issue.  Sometimes you just need to know which lenders to approach as some are more pragmatic and less reliant on computer decisioning than others.

    If you wanted to send me a copy of your credit file, I would gladly take a look and give you my observations - jenib@mortgagesforbusiness.co.uk

    Jeni
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    Mortgages For Business is a commercial partner of Property Tribes.

    Email: propertytribes@mortgagesforbusiness.co.uk

    Telephone number: 0345 415 3501


    Thanks for this guys, I really appreciate your help - makes some sense now. Yes, that's what the lender had said, it was a score, not necessarily anything adverse. They did accept me on a lower LTV product though. I do have some personal debt alongside, not a massive amount - just a couple of credit cards and a loan that was taken to refurb our house a couple of years ago.  

    I spoke to they chap that organises my car finance for me - he's a broker, he said that the car finance should really be showing up as a 'hire purchase' style agreement - therefore as a secured debt. If I don;t pay for it, they'll come and take the car etc.

    Does this sound correct?


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    well........ I agree that the car finance is technically secured against the car, but in the mortgage world, its regarded as unsecured borrowing.

    Credit scoring is incredibly complex and each lenders methodology is different - your postcode, self employed vs employed, % of utilised credit on credit cards, duration in employment and many, many other factors will influence the score - and this will be different for each lender.  So whilst I know this must have been really disappointing for you, I wouldn't rule yourself out of mortgages going forwards, even at the higher LTV, it just comes back to knowing which lenders to approach.

    Does this help?

    Jeni

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    Mortgages For Business is a commercial partner of Property Tribes.

    Email: propertytribes@mortgagesforbusiness.co.uk

    Telephone number: 0345 415 3501