The lender said the changes reflect the fact that a customer’s credit history does not always tell the full story, with life events often having a temporary impact on a borrower’s credit profile without defining their long-term financial position or future borrowing potential.
As part of the update, Foundation has simplified its residential credit tier structure, reducing the number of tiers from four to three and widening access for borrowers who are rebuilding their finances and may not meet the criteria of mainstream lenders.
Under the revised approach, Foundation will now consider unsatisfied county court judgments (CCJs) and defaults registered more than six months ago. The lender will also accept debt management plans (DMPs) across its F2 and F3 ranges and has removed limits around unsecured and revolving credit.
Rate reductions to reflect market conditions
For new business, Foundation has reduced selected F1 two- and five-year fixed rates by up to 0.2%, with rates now starting from 5.99%. Selected F2 two-year fixed rates have been cut by up to 0.15%, with pricing now starting from 6.19%, while selected F3 rates have been reduced by up to 0.1%, with rates beginning at 6.44%.
The lender has also withdrawn its F4 credit tier for new business as part of the streamlined structure.
What mortgage and protection advisers should take from the FCA’s AI stance
Sponsored by Sesame Bankhall Group
The changes are intended to give brokers greater flexibility when supporting clients with historical credit issues, while continuing to take what Foundation describes as a more common-sense approach to underwriting.
The criteria enhancements form part of a wider refresh of the lender’s residential proposition, which also includes updated loan-to-income (LTI) limits for higher earners and pricing changes across both its residential originations and product transfer ranges.
Grant Hendry (pictured), director of sales at Foundation, commented: “A credit history rarely tells the complete story of a customer’s circumstances. Many borrowers experience life events [that] can impact their credit profile for a period of time, but that shouldn’t automatically prevent them from accessing mortgage finance in the future.
“These changes reinforce our commitment to common-sense underwriting and taking a broader view of each case. By expanding our approach to adverse credit and recent payment blips, we’re giving brokers greater flexibility to support borrowers who are rebuilding their financial position.
“Ultimately, this is about helping more customers move forward on their homeownership journey while giving brokers the confidence that we can support a wider range of circumstances, making mortgages happen.”
