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Published on 24th December 2019

How complex are bad credit mortgages?

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Broker satisfaction with how mortgage lenders handle bad credit (adverse credit) cases is 74.6%, while the average satisfaction across all mortgage case types is 81.1%. 

This was one of the findings of the latest edition of the Mortgage Lender Benchmark which was released this month. Some 468 brokers shared feedback about the last five applications they've submitted to lenders.

Nate Harwood, Co-Founder of Smart Money People said, “Brokers appreciate that adverse credit and commercial buy-to-let cases are trickier and more specialist in nature. That said, they’re not prepared to cut lenders operating in these areas any slack. And with some 1.3 million people with adverse credit expected to be looking for a mortgage in the next year, how lenders handle adverse credit cases in particular, really does matter.”

Broker satisfaction with bad credit cases is lower than commercial buy-to-let cases (77.1%), which is often seen to be a 'tricky' case type.

The research has also identified the highest rated lenders for adverse credit and commercial buy-to-let cases.

Top 5 adverse credit lenders

1. Bluestone

2. Pepper Money

3. Precise Mortgages

4. The Mortgage Lender

5. Aldermore

When it comes to adverse credit cases, brokers are particularly dissatisfied with the speed to process applications through to offer. The average adverse credit lender received a 59% rating around seed, some 15% lower than the average across all cases (74%). Broker satisfaction with the ease of determining the maximum loan amount is another key weak spot, and stands at 76%, some 7% lower than the average (83%). One broker sharing feedback for an adverse credit case with Bluestone said: “Criteria for adverse is so simple and easy to understand. Also love the fact you can always just pick up the phone and run through the credit issues in a list and you always just get an immediate answer.”

Top 5 commercial buy-to-let lenders

1. BM Solutions

2. Leeds Building Society

3. The Mortgage Works

4. Kent Reliance

5. Precise Mortgages

The ease of determining product eligibility proved to be the key pain point for brokers leaving feedback for commercial buy-to-let lenders. The average commercial buy-to-let lender satisfaction rating is 77%, some 4% lower than the average seen across all cases (81%) and 2% lower than residential buy-to-let cases. One broker sharing feedback for a commercial buy-to-let case with BM Solutions said: “Easy criteria and generous rental calculator.”

The full Mortgage Lender Benchmark report includes individual SWOT analysis pages and heatmaps for 44 lenders and provides an in-depth assessment of the strengths and weaknesses of these lenders. A summary version can be found here: https://smartmoneypeople.com/mortgage-lender-benchmark

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