In this series of case studies, based on client testimonials from VouchedFor, FTAdviser speaks to advisers about particularly emotional or complicated financial planning cases to find out how they helped clients at difficult times in their lives.
Adviser name: Henry Armstrong
Firm name: Armstrong Wealth
Firm size: 2
Client life stage: Early to mid-career
The problem: A couple wanted to buy their dream house but one of the clients had very bad credit history and was being turned down by mainstream and specialist lenders. Their dream home was becoming a nightmare situation.
Henry Armstrong explains: "The couple had found their dream home and were so close to getting it - and yet so far.
"But they were worried they would lost the house as they could not get accepted by a mortgage lender.
"This was because one of the clients had a bad credit history. One had a squeaky clean credit file but the other had not.
"Although they had reformed their ways, having learned the hard way with county court judgements, they realised their credit history was having a bad effect on their mortgage applications.
"Although he had sharpened up over the past few years, he was still being categorised as a client with a poor credit history.
"It was all the more difficult for him, because the more complicated a mortgage scenario is, generally this means the more specialist providers will be the only ones to lend - and therefore more expensive for the borrower."
What were the challenges?
Both applicants had good income streams and good deposits so they felt able to pursue a mortgage in terms of the monthly commitment.
But they were being passed from pillar to post. They said they had seen a mortgage adviser before coming to us, who wanted to charge £2,000 just because one of the parties had poor credit history.
Now of course we charge for the extra work involved with helping people with poor credit histories get mortgages, but the idea of charging £2,000 - well there is no justification for it.
They were renting but wanted that house in that location. They had invested their emotions in that property before they even came to me.
The biggest obstacle was that the numbers and the rates they were provided showed that the few lenders who were prepared to go for it just wanted to charge through the nose for it.
A lot of poor credit lenders will create the interest rate base on the severity of the credit history and how recent it was.
Generally, mortgage systems will provide advisers with a checklist of criteria and you have to look at all the potential lenders, go through all the fine detail and compare all the fine print.
There are sometimes times when the system says a lender will accept someone on a case by case and you can go round the houses, calling them up only for them to say 'no'.
