In order to apply for a mortgage, a lender will take a look at the applicant’s credit history, as well as consider a number of other aspects of a person’s application. A person’s credit history is a record of the borrower’s repayment of debts, with this being expressed as a credit score or credit rating. The number a person’s credit is scored at is then considered on a scale which ranges from very poor to excellent – with poor, fair, and good being variations between the two. This week, the report titled Unlocking the power of the new normal home owner was released, which looks at mortgages in the modern day.
The new report – commissioned by Online Mortgage Advisor – sought the opinions of 2,000 consumers who were not in full-time employment – including business-owners, those in part-time employment, freelancers, contractors, workers on zero hours contract, people on parental leave, full-time parents, and those on a career break as well as retirees.
According to the recent study, nearly one in 10 respondents (nine per cent) said that they couldn’t find a mortgage at all.
Just 16 per cent of freelancers asked said that they couldn’t find a mortgage, while 20 per cent of people who were on maternity or paternity leave agreed. This rose to 28 per cent for those who work on a zero hours contract.
Job type aside, the participants in the survey also shed some light on their credit history.
In the study, almost half of the people asked (48 per cent) said that they have a good credit history and had never missed a credit payment. A further 22 per cent of people said that they had “rarely” missed a payment.
Meanwhile, 13 per cent of respondents said they had bad credit history, while five per cent admitted they “often” miss payments – limiting what they can borrow and the rates that they are offered.
The report points out that a notable one in 10 of the new normal home buyers (10 per cent of those asked) have never had credit.
“Although this avoids issues with lenders it could mean that people are missing out on the opportunity to improve their credit score – and not setting themselves up for home ownership down the line,” the report states.
Pete Muggleston, Managing Director at Online Mortgage Advisor, said: “New normal homeowners don’t fit the mould of traditional mortgage lenders.
“For example, freelancers often earn the same, or more, than full-time employees, but their income can vary from month to month – and mortgage lenders often want two or three years of accounts.