More2life has published data which highlights the top reasons cases are declined to help advisers better manage client expectations.
The biggest reason for declines in Q1 2023 was ‘value’ when the property failing to meet minimum/maximum value criteria, or the borrower wanted to release a higher LTV than was possible. This is particularly true of those seeking to rebroke or looking for further advances based on estimated rather than confirmed property values.
Flood Risk (second), proximity to commercial property (third), the home needing significant repairs (fourth) and single-skin construction (fifth) completed the top five reasons that cases were declined. This is the same five reasons as in Q1 2022 although commercial has fallen from first place to third place and value has risen to first from fifth place.
More2life agrees that the recent uncertainty in the property market will “no doubt” have played a role in some of the more cautious underwriting decisions around long-term sustained value and the impact the proximity to commercial property may have. This view is backed up by the rise in the number of properties which are declined as there is a perception that it will ‘perform worse’ than other similar homes – due either to location or a combination of factors such as layout, poor state of repair or lack of planning regulations.
The credit history of the borrower (sixth) can also have an impact on whether a case proceeds or declines with some lenders being cautious if the person has significant outstanding debts that may mean they need to sell the property to clear these in future.
Ben Waugh, managing director at more2life, said: “Advisers are the vital link between older homeowners and lenders, so we were keen to share this data to help them better manage clients’ expectations. No provider likes to say no and by highlighting the impact issues such as clutter, flood risk and proximity to commercial property can have on an application, advisers will be able to have more open conversations with clients and ultimately choose a lender who is happy to say yes.
“With six different funders who each have different underwriting criteria, more2life is ideally placed to support as many customers as possible. We are one of the few lenders which will accept spray foam in limited circumstances and our teams are happy to have discussions with advisers as part of the application process to understand what is possible.
“The current market volatility makes it even more important for advisers to have these conversations with their clients as part of the initial meeting and ensure that when they do submit an application there is a better chance of it completing successfully.”