Bluestone Mortgages
Bluestone Mortgages | Complex Credit & Specialist Mortgage Advice
Bluestone Mortgages is a specialist residential mortgage lender focused on customers who may not meet the standard criteria of a high-street bank or building society.
Part of the Shawbrook Group, Bluestone is particularly relevant where an application involves previous credit problems, self-employed income, contracting or other circumstances that need individual assessment rather than a straightforward automated lending decision.
At Kerr & Watson, we may consider Bluestone where a customer has defaults, County Court Judgments (CCJs), a Debt Management Plan or other historic credit issues, as well as for self-employed applicants and who need more flexible income criteria.
As with any lender, being able to meet one part of Bluestone’s criteria does not automatically mean it will be the most suitable mortgage, so affordability, credit history, income, property and the overall cost of borrowing all need to be considered.
Could Bluestone be the right mortgage lender for you?
Bluestone can be particularly useful where previous credit issues or non-standard income mean your circumstances need to be assessed in more detail than a standard mortgage application allows.
At Kerr & Watson, we compare Bluestone with other suitable lenders to establish which mortgage and lending criteria are most appropriate for your circumstances.
Bluestone Mortgages at a glance
| Bluestone Mortgages | |
|---|---|
| Residential mortgages | Yes |
| Buy-to-let mortgages | No |
| Complex credit | A core area |
| Credit scoring | Does not use a traditional credit score to make the lending decision |
| Defaults | Can be considered |
| CCJs | Can be considered |
| Debt Management Plans | Can be considered |
| IVAs | Can be considered subject to criteria |
| Bankruptcy | Can be considered subject to criteria |
| Unsecured credit arrears | Some cases considered |
| Self-employed applicants | Considered |
| One year’s trading | Can be considered |
| Contractors | Considered |
| CIS workers | Considered |
| Right to Buy | Available |
| Debt consolidation | Available subject to criteria |
| Capital raising | Broad range of purposes considered |
Mortgage products and lending criteria can change, so we check Bluestone’s current policy before making a recommendation.
Bluestone Mortgages Case Studies
We have helped customers secure mortgages with Bluestone Mortgages in a range of circumstances, including first-time buyer applications where previous credit issues needed careful consideration.
The case studies below show real examples of customers we have helped and demonstrate how factors such as credit history, deposit, income, affordability and lender criteria can affect the mortgage options available.
Who are Bluestone Mortgages?
Bluestone Mortgages is a specialist mortgage lender and part of the Shawbrook Group.
Its residential mortgage proposition is designed particularly for customers whose circumstances do not always fit the automated rules used by mainstream lenders.
That can include people who have experienced a life event that affected their credit history, self-employed customers with a relatively short trading history and contractors whose income needs to be assessed differently.
Bluestone’s mortgages are distributed through qualified mortgage advisers rather than being a conventional direct-to-consumer high-street mortgage range.
When might we consider Bluestone Mortgages?
We may consider Bluestone where there is a clear reason why mainstream mortgage criteria are not suitable.
Examples can include:
- Historic defaults.
- County Court Judgments.
- Previous mortgage arrears.
- Missed unsecured credit payments.
- A Debt Management Plan.
- A previous IVA or bankruptcy.
- Recent financial difficulty following a life event.
- A low credit score despite otherwise affordable circumstances.
- One year’s self-employed trading history.
- A contractor with limited contracting history.
- CIS income.
- Capital raising to consolidate debts.
- A Right to Buy purchase.
The important point is that Bluestone is not simply a lender for people with “bad credit”.
The lender considers the customer’s wider circumstances, the history behind any credit problems and whether the proposed mortgage is affordable and sustainable.
Bluestone mortgages and credit scoring
One of the main differences between Bluestone and many mainstream mortgage lenders is its approach to credit assessment.
Bluestone does not use a traditional credit score as the sole basis for deciding whether someone can obtain a mortgage.
A credit search will still be completed and the lender will examine the applicant’s credit history, commitments and payment record.
However, a low numerical credit score does not automatically mean an application will be declined.
This can be particularly useful where someone’s credit file contains historic issues but their more recent financial position is stable.
It does not mean that credit history is ignored. The type, value, number and timing of previous credit problems remain important.
Bluestone mortgages with defaults
Bluestone can consider applicants with previous defaults, including some defaults that remain unsatisfied.
A default occurs when a lender considers an account to have fallen sufficiently behind that the normal credit agreement has broken down.
Mainstream lenders can be restrictive where defaults appear on a credit report, particularly where they are recent.
Bluestone instead uses specialist criteria that take account of factors such as:
- When the default was registered.
- The type of credit involved.
- The outstanding balance.
- Whether it has been satisfied.
- The customer’s payment conduct since the default.
- Any other adverse credit appearing alongside it.
Minor communication-related defaults or relatively small credit issues may also be treated differently from significant financial defaults.
This is why we review the complete credit report rather than simply counting the number of defaults.
Bluestone mortgages with CCJs
County Court Judgments can also be considered by Bluestone.
As with defaults, acceptability depends on the circumstances rather than the existence of a CCJ automatically preventing a mortgage.
We normally look at:
- The registration date.
- Whether the CCJ has been satisfied.
- The amount involved.
- The reason it arose.
- Any additional adverse credit.
- The customer’s subsequent payment history.
Someone with one historic CCJ and otherwise good recent conduct may therefore present a very different lending risk from someone currently experiencing continuing financial difficulty.
Bluestone and recent adverse credit
A particularly useful aspect of Bluestone’s approach is that relevant credit criteria are assessed at completion rather than solely at the date the application is submitted.
This can matter where a credit issue is close to reaching the age required by Bluestone’s criteria.
For example, an applicant may not quite meet a particular adverse-credit time period when the mortgage application starts but could meet it by the time the mortgage completes.
Depending on the circumstances, this can allow the lender to structure the mortgage offer around the point at which the criteria will be satisfied.
This is a relatively unusual feature and can be valuable where the timing of a historic credit event is the main barrier to obtaining a mortgage.
Can Bluestone consider a Debt Management Plan?
Bluestone can consider applicants who are currently in, or have previously used, a Debt Management Plan.
A Debt Management Plan, or DMP, is an informal arrangement under which somebody makes reduced payments towards unsecured debts.
Bluestone will want to understand how the arrangement has been conducted and whether payments have been maintained satisfactorily.
Where a DMP will continue after completion, the ongoing payment will normally need to be included within the mortgage affordability calculation.
The existence of a DMP therefore does not automatically prevent someone obtaining a mortgage, but the overall financial position must still be sustainable.
Bluestone mortgages after an IVA or bankruptcy
Bluestone can also consider some applicants who have previously entered an Individual Voluntary Arrangement or been made bankrupt.
These are more serious credit events and the time since the arrangement was completed or the bankruptcy discharged will be important.
Where the event is more recent, the case may require individual referral and assessment.
A previous IVA or bankruptcy should therefore be disclosed at the outset so that we can establish whether Bluestone or another specialist lender is likely to be appropriate before a mortgage application is made.
Bluestone and missed mortgage payments
Previous mortgage or secured-loan arrears do not necessarily prevent Bluestone considering an application.
However, the lender will look carefully at when the missed payments occurred and the customer’s recent mortgage conduct.
Recent missed mortgage payments are generally treated more seriously than older problems followed by a sustained period of satisfactory payments.
It is therefore important to distinguish between a payment that was simply made late and an instalment that remained genuinely unpaid.
Reviewing the mortgage payment history before submitting an application can help avoid applying to a lender whose criteria the customer does not yet meet.
Bluestone and unsecured credit arrears
Bluestone can also consider certain levels of recent missed payments on unsecured borrowing.
Examples might include:
- Credit cards.
- Personal loans.
- Mail-order accounts.
- Retail finance.
- Other unsecured agreements.
The lender will look at how many payments have been missed, how recently this happened and whether the accounts are now being maintained.
Minor communication-related issues can also be viewed differently from significant borrowing that remains in arrears.
Bluestone mortgages for self-employed applicants
Self-employed applicants are another important part of Bluestone’s proposition.
Bluestone can consider customers with as little as one full year’s trading history.
This can make the lender relevant where someone has recently become self-employed and does not yet have the two or three years of accounts requested by some mortgage lenders.
The business still needs to demonstrate that the income being used is sustainable.
Bluestone can accept different forms of evidence depending on how long the customer has traded, including tax calculations, accounts and, in some circumstances, an accountant’s certificate.
Limited company directors
Bluestone can also consider limited company directors.
Where the applicant owns the whole business, Bluestone may be able to assess salary together with the company’s net profit rather than restricting affordability to salary and dividends alone.
This can be useful for business owners who retain profit inside their company rather than withdrawing all available earnings personally.
The correct income assessment will depend on the company’s ownership, trading history and financial performance.
Changing from sole trader to limited company
A change in trading structure can cause problems with some lenders because the newly incorporated limited company may appear to have only a short trading history.
Bluestone can consider situations where an established sole trader has recently transferred their business into a limited company.
The lender can look at the continuity of the underlying business rather than automatically treating incorporation as an entirely new business.
This can be particularly useful where the applicant has changed structure for tax or commercial reasons but continues to perform substantially the same work.
Bluestone mortgages for contractors
Bluestone can also consider fixed-term and day-rate contractors.
The lender may assess contractor income using the value of the current contract rather than requiring several years of conventional self-employed accounts.
Depending on the type of contractor, Bluestone will consider factors such as:
- Experience in the same line of work.
- Previous contracts or employment.
- Gaps between contracts.
- Time remaining on the current contract.
- Current contract value.
- Evidence of income received.
First-time contractors can therefore sometimes be considered where there is sufficient previous experience in the same occupation.
Bluestone mortgages for day-rate contractors
For qualifying day-rate contractors, Bluestone can annualise the applicant’s day rate when calculating income.
This can give a more representative assessment than using historic taxable income where the contractor’s current earnings have increased or they have recently moved into contracting.
The lender will still need evidence that the contract and underlying employment history support the income being used.
Bluestone mortgages for CIS workers
Workers paid through the Construction Industry Scheme can also be considered.
Bluestone can assess CIS applicants using evidence such as CIS vouchers or HMRC tax calculations, depending on the circumstances.
This can provide another option where someone is technically self-employed for tax purposes but receives regular income from construction work.
Bluestone remortgages and debt consolidation
Bluestone can also be useful for customers looking to remortgage and consolidate unsecured debts.
Debt consolidation involves raising additional money against the property to repay borrowing such as credit cards or personal loans.
This can reduce monthly commitments, but it can also mean converting debt that was previously unsecured into borrowing secured against your home and potentially repaying it over a much longer period.
We therefore assess whether debt consolidation is suitable rather than assuming a lower monthly payment automatically makes it the right option.
Bluestone’s ability to consider previous credit issues alongside capital raising can make it relevant where financial pressure has already affected the customer’s credit history.
Capital raising with Bluestone
Bluestone can consider capital raising for a broad range of legal purposes.
Depending on the application, this might include:
- Debt consolidation.
- Home improvements.
- Raising money for business purposes.
- Providing funds for another property transaction.
- Other legitimate personal purposes.
Bluestone Right to Buy mortgages
Bluestone also participates in the Right to Buy market.
Right to Buy allows eligible council tenants to purchase their home at a discount.
Specialist lenders can be useful where the customer qualifies for Right to Buy but their income or credit history makes a standard high-street mortgage more difficult.
Bluestone will still consider affordability, credit history and the property itself before agreeing to lend.
When might Bluestone not be the right lender?
Bluestone is designed for specialist residential lending, but that does not mean it should automatically be used whenever a customer has a credit issue.
Another lender may be more appropriate where:
- A mainstream lender will accept the customer’s circumstances at a lower overall cost.
- The adverse credit falls outside Bluestone’s current criteria.
- Recent payment conduct suggests the mortgage would not be sustainable.
- The required borrowing does not pass affordability.
- Income cannot be adequately evidenced.
- The property falls outside Bluestone’s security requirements.
- The customer requires a buy-to-let mortgage.
- Another specialist lender’s criteria fit the case more closely.
Specialist mortgages can sometimes carry higher interest rates or fees than mainstream borrowing, so we only consider them where the overall recommendation remains suitable.
What we check before recommending Bluestone
Before recommending Bluestone, we normally review the customer’s credit report in detail.
Rather than simply asking whether someone has “bad credit”, we establish:
- What happened.
- When it happened.
- How much was involved.
- Whether the debt has been repaid.
- Whether any adverse credit remains outstanding.
- How accounts have been conducted since.
- Whether the circumstances that caused the problem have changed.
We then consider income, expenditure, deposit or equity and the proposed mortgage alongside the credit history.
This allows us to determine whether Bluestone is appropriate or whether another mainstream or specialist lender offers a better solution.
Do you have to use Bluestone Mortgages?
No.
Kerr & Watson is an independent, whole-of-market mortgage brokerage, so we can compare Bluestone with other lenders rather than being restricted to its mortgage products.
Someone with previous credit issues may still qualify with a high-street lender depending on the age and severity of the problem.
Where specialist lending is required, different lenders also have very different approaches to defaults, CCJs, arrears, DMPs, IVAs and bankruptcy.
Our role is therefore to identify the lender whose criteria and mortgage product provide the most appropriate overall solution.
Speak to a mortgage adviser about Bluestone Mortgages
If you have previous credit issues, are self-employed or work as a contractor, we can review your circumstances before you make a mortgage application.
We can assess your credit history, income and affordability before comparing Bluestone with other suitable mainstream and specialist mortgage lenders.
Lender criteria, affordability calculations, product availability and lending terms can change. The information on this page is intended as a general guide and should not be relied upon as confirmation that a lender will accept a particular application or that a particular mortgage or finance product will be suitable for you.
The information on this page does not constitute personalised mortgage advice or a recommendation. The regulatory status of a mortgage or loan depends on the type of transaction and your circumstances. Many buy-to-let and commercial mortgages, and some bridging loans, are not regulated by the Financial Conduct Authority. Your home or other property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
Your Mortgage In 3 Easy Steps…
Conversation
Send us an enquiry to arrange a call to speak to a mortgage adviser about your circumstances, borrowing requirements and property plans.
Alternatively give us a call on 01252 224620 or email us on info@kerrandwatson.co.uk.
Research
We will use the information you’ve provided to research suitable mortgage options across the market and explain our recommendation to you.
If you need an Agreement in Principle, we can also arrange this as part of the process.
Application
Once you’re ready to proceed, we will submit the full mortgage application and supporting documents to the lender.
We will liaise with the lender and its underwriters, respond to any additional requirements and keep you updated until the mortgage offer is issued and through to completion.
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