Case Study: 'You can't always trust systems: you have to pick up the phone'

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.

Clients who have a good experience with you will stay with you.

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'. 

How did you overcome the obstacles?

I looked in all the mainstream as well as the specialist lists for a lender who would be interested.

There was a bit of apprehension as the clients wanted that property and there are obviously time sensitivities to consider when making an offer on a house.

We phoned everyone and was lucky in that the underwriter from the lender we chose was engaging and hands on. 

Naivety and inexperience can be your friends in these matters.

We went with The Mortgage Lender. The rates are slightly higher than the norm, but they deal with slightly more esoteric cases, such as poor credit or expats.

Their processes are open minded and you can speak with the underwriter, which is massively helpful.

And while our mortgage sourcing systems are great, you cannot always trust the computer to say yes.

For example, we put in all the criteria needed for the search for lenders, such as the fact the client had missed payments and a CCJ, and it narrowed the list down to just a few, but The Mortgage Lender was not on there.

So even though the system was not showing them as an option, I gave them a call anyway. 

What does that show, in your opinion?

Naivety and inexperience can be your friends in these matters - you are able to ask everyone and to be open to just picking up the phone and asking the right questions.

It it not always good to say you know what you are doing and to simply rely on systems, no matter how great these are.

Some people may get so 'expert' that they become set in their ways and think they know everything. 

But as we found out, the outcome might not be what you think it is - so it is always worth putting in that extra legwork.

What was the outcome for the client? 

They got the property. They are living in the house they thought they would never own.

We keep in touch with them now for protection discussions, and they talk about us to everybody, which is great in terms of word-of-mouth recommendations.

Clients who have a good experience with you will stay with you.

We have found that referrals are either where clients have felt so comfortable with the process and refer their friends and family to us, or their circumstances have been unconventional and they feel that we can think outside of the box. 

To some extent, some people could do things themselves, but they might be missing an opportunity and we won't charge anything for the initial conversation.

Service is very easy to talk about but very difficult to portray unless you are actually experiencing it.

What would be your top tip for someone starting out on their journey to become an adviser?

If you don't think you have enough experience, don't worry. 

Yes it might take you longer to find the answer, but if you are methodological and diligent and can trust the process, and are willing to get on the phones and keep ringing to get an answer, that will see you far.

Also, as we found out, you can't always trust the tech to be able to help that one client that does not fit the mould. 

Some clients just do not fit the criteria that you get on the mortgage sourcing solutions or other tech systems that filter out by criteria.

So again, it comes down to being willing to put in the time to make those calls and get the right answer.