MortgageGym is adding four specialist lenders to its online platform for mortgage applicants with lower credit scores.
These include Together and Precise Mortgages from the end of May, and Kensington Mortgages and Vida Homeloans from June.
The FCA-regulated mortgage adviser revealed that 39% of its online users do not meet the criteria of most traditional lenders and have a credit score of 720 or below due to factors outside of their control.
In order to service this sizable minority of applicants, the online portal – which combines robo and live-broker advice – will automatically direct applicants to live brokers categorised into 1-5 credit profile tiers based on live credit data.
This advice will be supplemented by new Open Banking technology that MortgageGym plans to launch in the summer, which will match live data from applicants’ bank accounts to lenders’ internal scorecards.
According to a recent YouGov survey commissioned by Together, 54% of mortgage applicants were rejected for lifestyle choices for reasons that many would consider the ‘new normal’.
This includes a low credit score, lack of credit history; too much debt/too many credit applications; their type of employment/income was not suitable; too near retirement age and had insufficient employment history.
Furthermore, 66% of millennials were rejected for reasons identified as being part of the ‘new normal’.
John Ingram, co-founder of MortgageGym, commented: “With the nature of work in Britain having transformed dramatically as traditional employment patterns have shifted and a growing spectrum of life styles emerging, the mortgage has not kept up with the times.”
“A key driver in this shift has been the emergence of the gig economy, zero-hours contracts, a rise in self-employed and people working longer. Many high street lenders have been slow to adapt to such diverse credit cases and borrowers with irregular income.”
He said that most mortgage providers’ automated decision-making and rigid criteria has led to many people being ‘locked out of the mortgage market’. As a result, a market of specialist lenders has arisen to meet these needs.
“Our aim has always been to create a transparent digital marketplace to match mortgage borrowers with the right mortgage lenders, making the mortgage process smoother and easier,” he explained.
“We recognise that the modern way of living means that people have different income streams and as such we can now offer tailored advice to everyone with the introduction of specialist lenders and our new eligibility tool.”
Additionally, MortgageGym has found that mortgage applicants with an annual salary of under £20,000 have the worst credit score and consequently face the highest cost of borrowing.
For example, a first-time buyer with a poor credit score could face paying £947.29 per month with a 5.79% two-year fixed rate. In contrast, a first-time buyer with a strong credit score could pay a mere £608.40 per month with a 1.62% two-year fixed rate.