New Metro Bank Mortgages For People with Poor Credit Ratings

Metro Bank has introduced a new range of mortgage loans that could be of interest to homebuyers who, for various reasons, have a less than perfect credit record. The London-based company’s announcement will be good news for those previous borrowers who have suffered financial difficulty and property repossession in challenging times.

The innovative mortgage deals from Metro Bank are likely to suit aspiring purchasers looking to get back onto the property ladder but struggling with low credit scores or an adverse history of payments. According to leading accountants PWC, an estimated 14 million people would like to buy their own home throughout the UK but have to deal with an imperfect credit rating.

Defaults accepted within limits

In some instances, loans will be possible even if an individual has unsatisfied county court judgements (CCJs). Even bankrupt individuals might be eligible for the new mortgages. There will not be a mandatory requirement to satisfy CCJs, where applicable, or to repay previous loan default balances. Furthermore, individuals will still be able to apply if the total values of satisfied defaults and CCJs are both less than £1,000 over the preceding three years. However, if unsatisfied, defaults must not exceed £1,000 nor CCJs £500 during the same period.

Metro Bank has not yet made the exact credit scoring requirements clear. However, interest rates are likely to be between 3.79 and 4.19 per cent per annum. Thus, customers who have their applications approved should expect to pay an additional 2.3 to 2.7 per cent a year. At the time of writing (April 2021), standard rates charged on loans of up to 80 per cent of a property’s value are around 1.45 per cent, fixed for two years.

Maximum loan value

Metro Bank information states that applications will be welcome from individuals, couples and up to four buyers to buy or remortgage a residential property. Loans are on a repayment basis and the upper limit will be £500,000. There is no interest-only option.

Applications are possible either in branches or through financial intermediaries such as personal advisers. Describing the new loan product, Metro’s mortgage director Charles Morley mentioned that the company was thrilled to offer a service that met more customers’ needs. According to Mr Morley, the bank would provide greater flexibility and support to those aspiring homebuyers whom other conventional lenders might overlook.

A public limited company, Metro Bank opened in Holborn, London, in 2010. Over the past decade, it has expanded its network of branches, which it describes as stores. It already has around £300 million of near-prime mortgage business on its loan books, acquired from other lenders. In the twelve months to September 2020, sub-prime and specialist lending of this type accounted for four-fifths of the home loan applications made to the relatively new company.

Unsettling Statistics

Research carried out by Metro Bank and YouGov2 has shown that more than four in five adults (81 per cent) aged under 45 and with unfavourable credit history thought that high street banks and mortgage lenders were indifferent towards them. In those aged 45 to 54, this ratio rose to nine out of ten (90 per cent).

When researchers questioned respondents about their concerns for the future, 43 per cent of the sample worried that their credit score would limit their ability to obtain a mortgage or remortgage. Finally, more than four in ten (41 per cent) revealed that at least one lender had declined their mortgage application due to a poor credit record.

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