Unsecured debt as a share of household income is now 31% – the highest it’s ever been, and above the level it reached in 2008 ahead of the financial crisis, when it was 27.5%.

Rise in missed payments

With the amount of debt at an all-time high, the number of incidents of missed payments is also increasing. In the mortgage industry, we often talk about defaults and CCJs, but the reality is that missed payments are far more common amongst borrowers.

In our latest Adverse Credit Study, we found 15% of adults to have experienced adverse credit in the last 3 years, it also revealed that 41% of all GB adults say they have missed more than one credit payment in their lifetime.

It’s as simple as not paying a credit card payment, utility bill or mortgage repayment. It can happen to anyone, especially to borrowers who may have experienced a recent life event which may impact their mental health and finances. According to Step Change, Debt Charity, 7 in 10 people who experience debt do so due to a life shock.

Analysis of our Pepper 6 to Pepper 24 completions from 2018, for customers with incidents of adverse credit within the last two years, shows that nearly 90% had missed payments on their credit file.
This means that your clients don’t need to have been taken to court for an outstanding debt or even have had a credit account go into default in order to fail a credit score.

Missing payments on their credit commitments alone could see their mortgage application rejected by a high street lender.

Competitive mortgages

The good news is, at Pepper Money, we can offer competitive mortgages to borrowers with missed payments on their credit file, and they don’t necessarily have had to bring the accounts up to date. We are even able to ignore missed payments or small defaults on utility, communication or mail order accounts.

This approach means that you have the flexibility to find solutions for your clients who may need to apply for a mortgage before they are able to clear the missed payments on their credit file.
So, don’t pass up the opportunity if your client has missed payments. Yes, they may not fit the high street, but specialist lenders like Pepper Money can help you find a mortgage that fits their unique circumstances.

To find out how much your client could borrow, visit our Residential Affordability Calculator or call our experienced BDM team who can help answer any questions before you submit a DIP.