Britons with bad credit are increasingly likely to contact a broker – Pepper

Britons with poor credit are increasingly keen to buy property and are more likely to contact a broker when doing so, according to research by Pepper Money.

The lender presented its latest findings to the British Senate specializing in 2020 loans last week.

Pepper found that 15% of 4,094 adults surveyed by YouGov in February had experienced negative finances such as missed payments, county court judgments (CCJs), defaults, unsecured arrears and secured arrears at course of the last three years.

And around 17% of them were planning to buy a property in the next 12 months, a total of around 1.34 million nationwide, according to estimates.

Encouragingly, this latest wave of research found that 57% of respondents with poor credit looking to buy or remortgage a property would seek advice from a mortgage broker – compared to 40% last year.

He also found that people with adverse credit were increasingly seeking professional counseling to help them with their situation and that the stresses of adverse credit were damaging mental health and relationships.

Unaware of the impact

Perhaps surprisingly, 58% of people with adverse credit problems came from the most affluent ABC1 social groups.

But there was also a lack of understanding from those interviewed about what events would affect credit records and the availability of mortgage finance as a result.

The majority of people believed it would take multiple events to affect a credit report – 61% said it would take multiple missed credit payments, 57% cited multiple missed utility bills and the same proportion believed it would would take several missed mortgage payments.

Fewer than one in ten people believed that a late credit payment would cause a mark on their credit report.

Nearly 20% of borrowers who had a form of adverse credit did not know what a CCJ was and therefore how it might affect their ability to obtain a mortgage.

Notably, many overestimated how long they would have to wait to get a mortgage, with more than 25% of people believing they would have to wait more than five years to apply for a mortgage following a CCJ.

And 70% worried about being denied a mortgage due to bad credit, but only 13% of respondents reported this happening.

Damage to health and relationships

Concerns have also been raised about finances having a detrimental effect on people’s health and well-being.

Almost half of those surveyed said financial worries had affected their mental health and well-being, while 46% had lost sleep and a third said their personal relationships had been affected.

The lender said the statistics show a growing opportunity for brokers to help borrowers buy a home or refinance.

Growing market

Pepper Money Sales Manager Paul Adams said: “Six months ago we carried out research which showed that the potential market for adverse credit mortgages was larger than anyone had probably realized. and this latest data indicates that the number of people with bad credit who are looking for a mortgage is on the rise

“The total population of people with bad credit has not changed since the last wave of research and still stands at 15% of adults.

“However, more of these people intend to buy property in the next 12 months, up slightly from 16% to 17%, which equates to an increase in the potential adverse mortgage market of nearly 80,000.

“This increase was driven by more people with poor credit intending to purchase rental property to rent out next year, and highlights an important growth market for brokers,” said he added.

Owain Thomas is an editor and contributor to Mortgage Solutions and editor to Specialist Lending Solutions. He also has experience in the areas of pensions, pensions, benefits and human resources. Owain has won two Headline Money Awards and Protection Review’s Journalist of the Year award.

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