Pay day loans spell trouble for mortgage applications

Pay day loans spell trouble for mortgage applications

Agents are increasingly clients that are seeing a history of employing payday advances being rejected for mortgages

John Charcol states the thing is growing and there is a need for the payday financing industry to better inform borrowers about the prospective effect taking right out a quick payday loan may have on future mortgage applications.

The broker claims this has seen a growth into the range would-be borrowers who possess either been declined a mortgage or offered a reduced loan amount from the foundation they usually have used a payday lender in past times.

John Charcol item technical supervisor Simon Collins claims this stance on payday lenders is certainly caused by coming from major banking institutions utilizing automated underwriting processes that do not account fully for specific circumstances.

Collins states: “It is certainly one of the ‘computer-says-no’ scenarios. Lenders might not have a group policy on payday advances nonetheless it does appear that in a suspiciously raised percentage associated with the situations we have been seeing, you’ve got a borrowing that is payday in the background.”

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