What is Bluestone Mortgages?
Bluestone Mortgages is a relatively new mortgage lender, catering to people who are likely to have been turned down for credit elsewhere. It doesn't include credit scoring in its underwriting process, preferring instead to deal with applications on a case-by-case basis, looking at the reasons behind past financial misdemeanours. Indeed, prospective borrowers are required to include a written explanation of the reason for any adverse credit included in their file as part of their mortgage application.
All cases have to be submitted through a mortgage adviser that's approved by specialist lender, Bluestone Mortgages - customers can't deal with the lender directly. In order to be put in touch with one of the selected advisers, you need to call a freephone number during working hours, Monday to Friday.
Bluestone Mortgages key feature
- Designed for borrowers with adverse credit
- Interest rates are generally significantly higher than for mainstream, prime mortgages
- Only available through a handful of approved mortgage brokers
- Higher than average product fees and valuation charges, when compared to mainstream lenders
Bluestone Mortgages pros and cons
Very accommodating lending criteria means people who may not be able to get a mortgage with mainstream lenders are likely to be approved
Help-to-Buy and Right-to-Buy options, as well as standard residential and buy-to-let
Capacity to overpay by up to 10% of the mortgage balance each year without having to pay an early repayment charge
| The interest rates are higher than for mainstream lenders, so the monthly repayments are also considerably more, as well as the total amount repayable over the term of the home loan
The product fees are generally higher than with many mainstream lenders
Only available through selected brokers, so you may not be able to use your normal intermediary
What types of mortgages does Bluestone Mortgages offer?
Bluestone Mortgages has products for first-time buyers, movers and people remortgaging, including those doing so to consolidate debt. It also has options for buy-to-let investors, as well as those looking to buy a property through the government's Help-to-Buy and Right-to-Buy schemes. There is a selection of fixed-rate and variable-rate deals.
The lender has 5 levels of products available, depending on the amount of adverse credit in the borrowers' history. It ranges from Clear (least adverse) to BBB (most adverse)
What is Bluestone Mortgages' lending criteria for adverse credit?
As a specialist lender, Bluestone Mortgages is set up to deal with customers with adverse credit. It does this by offering 5 levels of products depending on the severity of the poor credit history, with the more adverse borrowers having to pay a higher rate and only able to secure a deal at a lower loan-to-value. It also has the flexibility to its lending criteria, with the mortgage broker - which is on the Bluestone Mortgages' panel - able to liaise with the underwriter about the individual circumstances of the applicant. In addition, the applicant is required to provide a written explanation of why the adverse credit event happened, which helps provide context.
Overall, the lender will consider most types of adverse credit, including CCJs, IVAs and bankruptcy. The current lending criteria is:
Bad-credit lending criteria for Bluestone Mortgages
|Up to LTV||85%||80%||80%||75%||70%|
1 in 36 months (satisfied)
|1 in 36 months||2 in 36 months||3 in 36 months||4 in 36 months|
|CCJs||0 in 36 months||1 settled in 36 months||1 in 36 months||2 in 36 months||3 in 36 months|
|Mortgage/rent arrears||0 in 13-24 months||1 in 13-24 months||2 in 13-24 months||3 in 13-24 months||4 in 13-24 months|
|Bankruptcy/ Sequestration/ DRO or IVA/Trust Deed||More than 6 years ago||More than 3 years ago||More than 3 years ago||More than 3 years ago||More than 3 years ago|
CCJs and defaults are ignored if they were for less than £300, were linked to telecoms or happened longer than 3 years ago. All pay day loans have to be cleared before completion and only one applicant can have had a pay day loan in the last 12 months.
What interest rates does Bluestone Mortgages charge?
The specific rates available will vary over time, so it pays to check with your mortgage broker when you plan to make your mortgage application to get the most up-to-date information. At the time of writing, the best-advertised rates are:
- 2-year fixed rate from 8.49%
- 3-year fixed rate from 7.69%
- Variable rates from 6.60%
At the end of the introductory period, the rate reverts to the lender's standard rate, which is currently 4.25%.
How long does it take to get a mortgage offer with Bluestone Mortgages?
The service levels at Bluestone Mortgages vary over time, depending on how busy the lender is across the year. At the time of writing, it is underwriting all applications within 24 hours. It is worth noting that you may be required to submit additional information to support your application if you have a particularly complex case and that this may add extra time to the underwriting process.
What fees does Bluestone Mortgages charge?
When you buy a property in the UK, there are certain fees you can expect to pay, including conveyancing for the legal side of the process, as well as stamp duty. In addition, there are often charges associated with the mortgage. In the case of Bluestone Mortgages, there are product fees for the majority of its deals, which is generally £1,495 for standard residential mortgages (with an additional 1% payable by applicants with IVAs, DROs or bankruptcy discharged within the past 6 years), or an additional 2% for buy-to-let applications. Bluestone mortgage also offers a range of fee-free mortgage products with slightly higher interest rates but no fee to be paid.
There is also a valuation fee, which operates on a sliding scale depending on the property's value, starting at £300 for a property worth between £75,000-£150,000, up to £950 for a property worth between £900,001 to £1m. This is for a standard valuation, although there are more in-depth surveys available at an additional cost.
Can you make overpayments with Bluestone Mortgages?
Borrowers are permitted to overpay their mortgage by a maximum of 10% of the mortgage balance each year without incurring a financial penalty. If the repayment exceeds 10% per year - or if the mortgage is repaid in full during the introductory period - the following early repayment charges are likely to be payable:
Early repayment charges for Bluestone Mortgages
|Early repayment charge||Year 1||Year 2||Year 3||Year 4||Year 5|
|2-year fixed rate||3%||2%||n/a||n/a||n/a|
|3-year fixed rate||3%||2.5%||2%||n/a||n/a|
|5-year fixed rate||3%||2.5%||2%||1%||0.5%|
What is the maximum mortgage term with Bluestone Mortgages?
The longest mortgage term at Bluestone Mortgages is 35 years. The maximum age for the oldest applicant at the end of the mortgage term is 80, which means to secure the maximum mortgage term, the product has to be taken out by the time they are 35. Borrowers need to bear in mind that the longer the mortgage term, the more you end up repaying overall across the lifetime of the product because of the extra interest payments you accrue.
What credit reference agency does Bluestone Mortgages use?
Although Bluestone Mortgages doesn't determine whether it will lend based on credit scoring, it does use information provided by Experian to see the events in your credit history. It uses the applicant's Experian credit file to verify the information given about, for example, defaults and CCJs to help better understand an individual's circumstances. This is done manually by an underwriter rather than through an automated system.
Bluestone Mortgages customer reviews
According to customer review site Trustpilot, Bluestone Mortgages is rated 4.7 out of 5.0 stars, based on over 400 reviews. 90% of respondents deemed it to be "excellent", with 5% classifying it as "bad". The positive reviews centred on customer service, with reviewers rating the speed and efficiency of the mortgage approval process. Conversely, a common theme among the negative reviews is issues with requests for additional information and documentation and the delays this has caused to applications.
As a specialist lender, Bluestone Mortgages is not for everyone and, indeed, is only really going to be suitable for those with an adverse credit history or very complicated circumstances. It offers a lifeline to those who would struggle to get mortgage finance elsewhere, but this does come at a price as the interest rates are substantially higher.