Pepper Money

Pepper Money is a specialist mortgage lender: a firm whose business is lending to homeowners who may not fit a high street bank's standard criteria. It provides mortgages to first-time buyers, home movers and remortgagers who are often overlooked by other lenders, and it trades as Pepper Money and also under the name Pepper Homeloans¹. Its website is www.pepper.money¹.

What that means in practice is that Pepper Money does not usually appear on the high street. It lends against property, through mortgage brokers, and its products sit alongside the wider market of mortgages and loans. If you have had credit problems, irregular income, or a situation a mainstream lender's computer says no to, a broker may bring a lender like Pepper Money into the conversation. This page explains what Pepper Money offers, who it tends to lend to, how an application works, how charges are structured, and where to turn if things go wrong.

What Pepper Money offers: mortgages secured on your home

Pepper Money's business is lending secured on property. It provides mortgages to first-time buyers, home movers and remortgagers often overlooked by other lenders¹, sold under the Pepper Money and Pepper Homeloans names¹. Everything it lends is secured on your home, which is the defining feature of this kind of lending: the loan is tied to the property, and if repayments are not kept up the lender can ultimately seek to repossess it.

Within that, specialist lenders like Pepper Money typically serve several situations: residential mortgages for purchase or remortgage, lending to people whose credit history or income pattern makes a mainstream lender unsuitable, and secured loans, which sit second behind a first mortgage. A secured loan is a form of borrowing where the lender may lend to people with a bad credit history who would not get an unsecured personal loan⁴. That is the market Pepper Money and firms like it operate in.

Because the products are secured, they behave differently from unsecured credit. The amounts borrowed tend to be larger, the terms longer, and the consequences of non-payment more serious, because the debt is attached to your home. The general guides on mortgages, home buying and loans set out how these products work across the market, and Pepper Money's own website, www.pepper.money¹, carries its current product range and terms. This site does not carry product rates or fees, so check the lender's own material for today's figures.

Who Pepper Money lends to

Specialist lenders exist for borrowers the mainstream finds difficult. The clearest example is adverse credit. Secured lenders may lend to people with a bad credit history who would not get an unsecured personal loan⁴, and guarantor-style products are usually marketed at people who either have bad credit or were turned down by other lenders⁵. A firm like Pepper Money looks at the same credit file a bank would see, but its lending criteria are built to weigh that history differently, often taking more account of the individual circumstances behind a missed payment or a default.

Other groups specialist lenders commonly serve are the self-employed, contractors and people with irregular or complex income, whose earnings do not fit a standard salaried pattern. Brokers, who arrange these applications, will match a borrower's situation to the lenders whose criteria fit it.

It is worth knowing what the alternatives are if your credit file is the problem, because a secured loan or specialist mortgage is not the only route and is rarely the cheapest:

• Credit-builder credit cards are designed for people with a poor credit record or little credit history, and can rebuild a file over time⁶.
• Credit unions offer accounts and borrowing to people on low incomes or with a poor credit file⁷, and some provide current accounts⁸. Finders are listed separately for England, Scotland and Wales, and for Northern Ireland⁹.
• Responsible finance providers offer fair and affordable credit to people and households who may have limited options from mainstream lenders¹⁰.

Be cautious with short-term loans aimed at people who might struggle to get a bank loan or have a poor or bad credit history¹¹: they are an expensive way to borrow and can make a credit situation worse rather than better. The guides on credit scores and credit reports and debt explain how credit files work and where free help fits in.

Applying: credit checks, documents and how long an offer lasts

You cannot apply to Pepper Money directly: applications come through mortgage brokers, who submit the case, package the evidence and deal with the lender's underwriters on your behalf. The broker checks your details, matches you to lenders whose criteria you fit, and handles much of the paperwork.

As with any mortgage, the lender will usually run a credit check to see your credit history, including whether you have had problems paying money back¹². Credit checks show information about money you have borrowed and any problems paying it back¹³. A lender can only run a check with your agreement, so you will be asked for consent as part of the application¹³.

Alongside the credit check, expect to provide evidence of who you are and what you earn. Typical requirements for a mortgage application include proof of ID, details of your employment, and up to six months of bank statements¹⁴. If you are in full-time employment, you may need your P60 from your employer and at least three months' worth of payslips¹⁵. Bank and credit card statements from the last three to six months are commonly requested¹⁴. For self-employed applicants and contractors, the evidence is different in kind, usually accounts, tax returns and evidence of earnings over a period, and this is where a broker's preparation matters most.

Once the lender is satisfied on affordability, the credit file and the property, it issues a mortgage offer. Mortgage offers are usually valid for six months¹⁴, which sets the window for completing a purchase or a remortgage before the terms need to be reassessed.

How fees, valuations and early repayment charges work

Specialist mortgage lending carries charges, and the structure matters more than any single figure, because figures change and are set out in Pepper Money's own product terms at www.pepper.money¹. Broadly, three kinds of charge come up with secured lending.

First, arrangement and valuation costs. A lender needs a valuation of the property before it will lend, because the loan is secured on it, and the application may carry an arrangement or booking fee. Whether these are paid up front or added to the loan varies by product, and a broker can tell you which applies. Anything added to the loan accrues interest over the term, so a fee added to the mortgage costs more in total than the same fee paid up front.

Second, early repayment charges. Fixed and discounted rate deals typically run for an initial period, and if you repay the mortgage early, overpay beyond a set allowance, or move away during that period, a charge usually applies. The charge is normally a percentage of the amount repaid, set out in your offer, and it steps down or falls away once the deal period ends. Check the specific terms in your offer before making a large overpayment or redeeming the loan.

Third, what happens when a deal period ends. When a fixed deal comes to an end, the borrower moves onto the lender's standard rate, as one major lender's guidance to its own customers puts it: "If your fixed deal is coming to an end, you'll move on to the Nationwide Standard or Base rate mortgage"¹⁶. The same pattern applies across the market: the standard rate is usually higher than the fixed rate and can vary, so the end of a deal is the point to look at what else is available, through a broker or directly.

Charges can also arise on changes to the loan itself. With some home finance products, you can repay the product or transfer it to a new home, "but there may be charges for doing so"¹⁷. Before any move or change, ask for a written statement of the charges that would apply.

Managing a Pepper Money mortgage: payments and insurance

Once the mortgage is running, the monthly payment is one part of a wider set of costs that come with owning a home. Home buyers need to pay mortgage repayments, mortgage protection insurance in case of illness or job loss, life assurance, contents insurance, rates, utility bills, and any ground rent and service charges¹⁸. Budgeting for the full set, not just the mortgage, is what determines whether the arrangement is sustainable.

Overpayments are usually possible, but the terms in your offer govern them. Many deals allow a limited overpayment each year without an early repayment charge, with charges above that threshold during a fixed or discounted period. Because the rules differ by product, confirm with Pepper Money or your broker what your deal allows before making an extra payment.

Insurance is worth separating from the mortgage itself. Mortgage protection insurance, in case you fall ill or lose your job, and life assurance are listed among the ongoing costs of home ownership¹⁸, and the guides on insurance and protection insurance explain how these products work and what they cover. A lender cannot require you to buy its own insurance, and cover can be shopped for separately. If you do want protection, check what a policy excludes and whether it would actually pay out in your circumstances, because a policy that does not fit your situation is money wasted.

Keep an eye on your statements and your rate. When a deal period ends and you move to the lender's standard rate¹⁶, your payment can change, and staying on a standard rate indefinitely is often more expensive than moving to a new deal. A broker can tell you what remortgage options exist, including with other lenders, when your deal period approaches its end.

Struggling with repayments: help and when repossession applies

Because a Pepper Money loan is secured on your home, falling behind is more serious than with unsecured credit: the lender can ultimately begin repossession proceedings. The most important thing to know is that help works best early, before arrears build up.

The first step is to contact the lender as soon as you can see a problem coming. Lenders have obligations to work with borrowers in difficulty, and options can include reduced payments for a period or a payment holiday, agreed on the basis of what you can actually afford. Free debt advice helps you work that out: MoneyHelper provides free and impartial money and pensions guidance¹⁹, and Business Debtline offers a debt advice service for small business owners and the self-employed²⁰, which matters for many specialist mortgage borrowers whose income comes from a business.

If the situation is more serious, there are further options. In Scotland, the Home Owners Support Fund exists for homeowners whose bank or mortgage lender wants to begin repossession proceedings in court²⁴. Also in Scotland, a protected trust deed is one formal option, though alternatives such as the Debt Arrangement Scheme, refinancing if you have a lot of equity, or bankruptcy may suit better depending on your circumstances²⁵. In England, Wales and Scotland, a borrower can ask their mortgage lender to write off debt using a formal letter²⁶. The debt guide sets out the full range of solutions and where free advice fits.

Repossession is a last resort, not a first step, and lenders are expected to consider alternatives before starting court action. But ignoring the problem does not stop it: arrears grow, and the later you engage, the fewer options remain. Free, impartial advice is available whatever your situation, and it costs nothing to ask.

Complaints and how your money is protected

Pepper Money is authorised by the Financial Conduct Authority, and has been since 22 May 2019¹. Its permission covers entering into regulated mortgage contracts as a lender¹. The company behind the brand was incorporated on 27 March 2018 and is active². You can check its current status yourself on the FCA Register using the reference number in the key facts box above.

If something goes wrong, complain to Pepper Money first, using the contact details on its website at www.pepper.money¹. Give it the chance to put things right. If you are not satisfied with the response, complaints about financial businesses can be taken to the Financial Ombudsman Service, which publishes complaint data across product groups each quarter, covering firms of all kinds²⁷. The ombudsman's service is free to consumers.

One warning worth having on any lender's page: scammers impersonate financial firms and official bodies. The Financial Services Compensation Scheme lists seven signs of a scam: being asked for money or payment details, a message from an unusual source like WhatsApp, a phone number not on the official website, an email address that does not match the organisation, an unregulated firm, compensation offered in a foreign currency or from a firm in another country, and American spellings or spelling errors²⁸. Fraudsters have also been seen to contact people by email, post or phone claiming to be from an official body or using the name of an employee to extract money²⁹. If a message claims to be from Pepper Money and asks for payment, do not use any contact details in the message: look them up on the official website instead. The scams and fraud guide covers this in full.

For free, impartial help with any money question, including complaints and mortgage worries, MoneyHelper provides guidance at moneyhelper.org.uk and on 0800 011 3797³.