Nick Carlino is a consultant at Savills Private Finance
“The couple’s position is common as first-time buyers struggle to get on the ladder. They are sensible to consider a fixed rate as this will ensure their payments don’t fluctuate.
Some lenders still impose a higher lending charge (HLC) if the borrower has less than a 10 per cent deposit, so they should avoid these. They should choose a lender that assesses how much they can borrow on an affordability basis. They will benefit from having no dependants, personal loans or outstanding debts and should be able to borrow more than under strict income multiples.
They could consider Northern Rock’s two-year fix at 5.69 per cent, available up to 95 per cent loan-to-value (LTV) with no HLC. There is a £1,995 arrangement fee, which can be added to the loan.
Alternatively, Bristol & West has a two-year fix at 5.39 per cent with a 1.5 per cent fee, which can be added to the loan. The fee is higher but might be worth paying to get the cheaper rate.
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David Copland is deputy managing director of Pink Home Loans
“Brad and Angie’s fluctuating income will mean that they should look to a self-cert lender. Most self-cert lenders lend up to 90 per cent LTV. Those that do lend up to 95 per cent usually apply a HLC.
Pink is currently offering an exclusive Mortgage Express product via the packaged submission route. The product offers an initial pay rate of 6.44 per cent, fixed until 31/07/2009, up to 95 per cent LTV for first-time buyers. There are no HLCs and a £999 arrangement fee.
However, if affordability is an issue and their joint income does not stretch as far as they need, they may have to take the full status route. This would mean looking to an affordability based lender and incurring a HLC. Pink offers a semi-exclusive two-year fix at 6.94 per cent in conjunction with First National. It is available on a packaged submission basis, offers a free valuation, £799 arrangement fee and HLC of 11 per cent.”
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Katie Tucker is a technical specialist at John Charcol
“Brad and Angie are right to come to a broker as they will benefit from the strong relationships that we have with underwriters. Although the income varies, if Brad has the last 12 months payslips it would not be unreasonable for a mainstream lender to consider this if we proposed it well.
At 95 per cent, I’d start with Woolwich; Alliance and Leicester, which can lend up to six times income on affordability; Cheltenham and Gloucester, if the couple’s credit score is strong; Clydesdale and Basinghall. As the income is erratic, I would advise the clients that it is vital that they put away at least three month’s payments as soon as possible for emergencies.
Without 12 months’ payslips, they can always self-certify. Mortgage Express will do 3.25 times income and has a 6.44 per cent two-year via Pink.”
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