Case Study: First-Time Buyer Mortgage with Adverse Credit in Farnborough

Introduction

We recently helped a first-time buyer secure a mortgage to purchase a flat in Farnborough, Hampshire, despite having several outstanding defaults on their credit file.

The application was particularly challenging because the property was situated above commercial premises, which created an additional restriction when identifying suitable mortgage lenders.

By reviewing the customer’s credit history, researching specialist lenders and discussing the property with the lender before applying, we identified Bluestone Mortgages as a suitable option and successfully secured the mortgage required.

The Scenario

Our customer was looking to purchase their first home independently in Farnborough.

They were employed and had a regular salary, but their credit history included multiple defaults registered within the previous three years. These were still showing as outstanding on their credit report.

The property was a purpose-built flat situated above commercial premises, which meant we needed to consider both the customer’s financial circumstances and the property’s suitability as mortgage security.

The main mortgage details were:

Our customer wanted a longer mortgage term to help keep the monthly repayments manageable, alongside an initial fixed interest rate to provide payment certainty.

Although the mortgage amount was relatively modest compared with their income, affordability was not the main difficulty. The challenge was finding a lender whose criteria accommodated the customer’s credit history and the property itself.

The Challenge

There were two significant challenges to overcome, both of which affected the lenders available.

Multiple Outstanding Credit Defaults

Our customer had experienced previous credit difficulties, resulting in several defaults across different types of borrowing.

Some defaults had been registered within the last three years and remained outstanding.

This restricted the number of lenders willing to consider the application, particularly those relying heavily on automated credit scoring.

Although the customer had sufficient income for the borrowing required, a mortgage application involves more than demonstrating affordability.

We needed to identify a lender prepared to consider the specific credit history rather than relying solely on a credit score.

Purchasing a Flat Above Commercial Premises

The second challenge was the property itself.

Our customer wanted to purchase a purpose-built flat located above commercial premises in Farnborough.

Some mortgage lenders restrict lending on flats above or near commercial units because of concerns about the property’s future saleability and suitability as security.

The type of commercial use and the property’s individual characteristics can influence a lender’s decision.

Finding a lender willing to consider the customer’s adverse credit was therefore only part of the challenge. We also needed to establish that the lender could accept the property.

Both requirements had to be satisfied for the mortgage application to proceed.

What We Did

We began by reviewing our customer’s financial circumstances, credit reports and the details of the property they wanted to purchase.

This included examining the outstanding defaults, payslips, bank statements and proposed deposit arrangements.

Understanding the customer’s credit history before approaching lenders was something we needed to consider because different lenders apply different criteria to the type, age and status of defaults.

Researching Specialist Mortgage Lenders

We carried out whole-of-market research, focusing on lenders who could consider applications involving adverse credit.

Our research needed to establish which lenders could accommodate the customer’s outstanding defaults while also meeting their borrowing and affordability requirements.

Rather than selecting a lender based solely on its willingness to consider adverse credit, we assessed the property requirements alongside the customer’s financial circumstances.

Checking the Property with the Lender

Given the flat’s position above commercial premises, we contacted lender representatives before submitting the application.

We discussed the circumstances with the lender’s business development contact and checked the relevant property requirements in advance.

This allowed us to establish whether the proposed security was acceptable under the lender’s criteria before progressing with the application.

These early conversations were important because there was little benefit in applying to a lender that could accommodate the credit history but would not consider the property.

Preparing the Mortgage Application

Having identified Bluestone Mortgages as a suitable lender, we gathered the relevant supporting information.

This included identification, proof of address, three months’ payslips, bank statements and evidence of the gifted deposit.

We also liaised with the estate agents and solicitors involved in the purchase.

By investigating the main lending issues before applying, we aimed to reduce the risk of avoidable declines and unnecessary credit searches.

The Solution

We recommended a specialist residential purchase mortgage with Bluestone Mortgages.

The mortgage was arranged on a capital repayment basis over 35 years, with an initial two-year fixed-rate period.

Bluestone was suitable for this particular application because its lending approach could accommodate the customer’s adverse credit circumstances and the flat’s position above commercial premises.

The gifted deposit was also acceptable within the proposed mortgage arrangements.

The longer repayment term helped address the customer’s requirement for manageable monthly commitments, while the fixed-rate period provided certainty over repayments for the first two years.

The two-year initial deal also provided an opportunity to review the customer’s mortgage options once their credit profile had potentially improved.

However, any future remortgage would depend on the customer’s circumstances, lender criteria and mortgage products available at that time.

Why This Solution Worked

This case study highlights identifying a lender whose criteria could accommodate more than one unusual aspect of the application.

Our customer’s income supported the relatively modest borrowing requirement, but their credit history restricted the availability of mainstream mortgage products.

At the same time, the property’s location above commercial premises meant that not every specialist adverse credit lender would necessarily have been suitable.

Bluestone Mortgages provided a lending option that addressed both challenges.

By reviewing the credit history, checking the property’s acceptability in advance and preparing the supporting documentation, we were able to progress an application that required careful lender selection.

The Result

We successfully secured a mortgage with Bluestone Mortgages for our customer’s first property purchase in Farnborough.

The mortgage provided the borrowing required on a 35-year capital repayment term with an initial two-year fixed rate.

Despite the outstanding defaults and the property being situated above commercial premises, we recommended a lender able to consider the complete circumstances.

Our customer was very happy with the service received, and family members also provided positive feedback and recommended Kerr & Watson’s mortgage advice services.

What This Case Shows

Having multiple outstanding defaults does not necessarily mean that purchasing a property is impossible.

Different lenders take different approaches to adverse credit, and the type, age and status of defaults can make a significant difference to the options available.

This case also demonstrates why the property itself needs to be considered alongside a customer’s finances. Flats above commercial premises can be more challenging to mortgage, particularly when combined with other specialist lending requirements.

Our early discussions with the lender helped us identify a suitable approach before submitting the application.

For first-time buyers with previous credit difficulties, researching lender criteria carefully can help avoid applications to lenders who are unlikely to accommodate their circumstances.

Looking for a First-Time Buyer Mortgage with Adverse Credit?

If you are looking to purchase your first home but have defaults, missed payments or other credit difficulties, Kerr & Watson can review your circumstances and explain the options available.

We provide independent, whole-of-market adverse credit mortgage advice, including assistance with properties that may fall outside standard lender criteria.

Whether you are buying in Farnborough or elsewhere, our team can help identify suitable lenders and guide you through the application process.

If you are looking for a mortgage broker in Farnborough, contact Kerr & Watson to discuss your requirements.