A father-of-five was left homeless and almost lost his dream property after his mortgage lender pulled their offer just two days before he was due to move in.
Neil Hindle, 55, a facilities manager, had been due to complete on his new home in just 48 hours time when his mortgage provider discovered an old credit card debt from nine years ago after a last-minute check.
A devastated Mr Hindle said he’d forgotten about the £500 he owed to a credit card company from 2012, as he’d already completed several checks with his lender without this appearing.
Bad marks should disappear from your credit file after six years, but mortgage lenders can technically still dig out older debts from bank statements or their own records, according to the Debt Camel blog.
It isn't standard practice for such old debts to be taken into account when you're applying for a mortgage but each provider does set its own criteria for who it will lend money to.
Your mortgage offers can also be pulled right up until the point of completion - something which Mr Neil wants to make other property buyers aware of.
He had been renting for the past decade and thought this was his last chance to become a property owner once again, after losing his home previously through a divorce.
Mr Hindle had to move in with his son for five weeks after being told his mortgage would no longer be going through, as he'd already agreed to move out of his rented accommodation.
He said: “We got a call from our broker saying the lender had pulled the finance we needed. We were gobsmacked.
“We were going to lose the house and be homeless all over a debt of a few hundred pounds, but the lender insisted their criteria wouldn’t allow them to provide the mortgage with a credit default on my file.”
By this point, Mr Hindle had already paid a £15,000 deposit to secure a new-build home in Blackburn, Lancashire for himself, partner Lorraine Tomkins and his two children, aged ten and 13.
A remaining £37,000 was due upon completion to make up the £52,000 deposit he’d agreed to pay for the £213,000 property - money he'd release from his private pension after reaching the age of 55.
Mr Hindle said the £500 credit card debt only showed up in the week he was due to get his keys when his lender completed a final check.
And despite paying the debt off straight away, his mortgage provider said they were still unable to help him.
He continued: “We were supposed to complete on the Friday, but on the Monday the mortgage lender ran a type of check on us - after running checks on us before - for a certificate of tenancy.
“From that, the mark on my credit history appeared, which I had no idea of because it was fine all the way until then.
“They said they could no longer offer us a mortgage. This was on the Wednesday.
“At this point we’d had the mortgage approved for around six months and everything was fine before. We’d passed the mortgage in principle stage.
"We were in a bad state and thought we’d lost everything and were thousands of pounds down."
The developer had agreed to hold the property for Neil until he found another deal and, after speaking to a broker, he managed to secure a new offer with specialist lender Together.
He finally moved into his new home in July 2021 after taking out a 15-year variable rate mortgage on a loan amount of £161,000.
Mr Neil is paying higher fees at the moment due to the old credit card debt but intends to remortgage to a cheaper fixed-rate deal once the poor credit marker is removed from his file.
As well as facing the prospect of losing his dream home, Mr Neil was also threatened with penalty charges for not completing in the timeframe.
These fees, which amounted to around £2,000, were later wiped by his developer.
Mr Neil said: "Together came back to me quite quickly with various options and I needed to go through the verification process again, but they were confident we’d get there.
"I think the whole process took around five weeks to get the new mortgage and complete."
What the experts say you should do if this happens to you
If your mortgage has been rejected near completion, your best bet to securing your property still is to first speak to your lender to see what can be done to proceed with your deal.
The next step would be to then seek out other lenders if your original mortgage provider can't help you, according to Myron Jobson, personal finance campaigner, Interactive Investor.
He said: "Being rejected for a mortgage deal because of a previously unnoticed spot on your credit record when you are so close to the finish line is understandably heart-breaking.
"The first port of call is to contact the existing lender to establish whether anything can be done to get the mortgage deal over the line.
"It could be a case of beefing up your deposit if you have the means to do so as higher deposits are viewed more favourably.
"Depending on how severe the spot on your credit record is, you might be able secure a mortgage from another lender."
Sadly, mortgage lenders are allowed to pull deals right up until completion if they spot something they don't like on your credit report.
They are also free to do as many spot checks as they choose in the run up to completion day.
Eleanor Williams, personal finance expert at Moneyfacts explains: “Borrowers should be aware that mortgage lenders have the right to withdraw an offer at any time before completion.
"This means even after contracts have been exchanged an offer is not yet guaranteed, although this is rare.
"There are various reasons this could happen, with most mortgage offers including a section explaining what those situations may be.
"One of these could be when there have been material changes to the facts and circumstances that an application has been based on, and it may be that as there is currently so much economic uncertainty lenders might be more likely to reassess applicant’s finances during the application process."
Tips to improve your credit score
If you're looking to buy a property but your credit score still needs a bit of work, mortgage lender Together has provided four tips to boost your profile.
- Find out how good or bad your score is
The first step is finding out where you stand in terms of your credit file. You can start by checking your score for free with credit reference agencies like Experian and Equifax. This will help decide your next steps and where you can make changes to improving your score.
- Check your report for errors
Make sure your report is free from errors and simple mistakes. Errors such as a misspelling or an incorrect address could negatively affect your score. Be sure to check your credit report and look to see all the information is correctly detailed. If you do find errors, call your provider to rectify the information as fast as possible.
- Make payments on time
Payment history is an essential factor in influencing your credit score. Default and late payments drastically impact your rating and often one late payment can plummet your score. Looking into auto payments through your bank, or getting a banking app, can relieve the stress of remembering payment deadlines and ensure they are paid on time.
- Get on the electoral roll
Registering to vote and getting on the electoral roll can help companies identify you easier and speed up the credit application process. Lenders typically have more confidence in their lending decisions if they’re able to easily identify applicants.
