Unfortunately, he has some adverse in the form of missed mortgage payments on his existing mortgage which is with a non-conforming lender. He is of the opinion that a BTL remortgage would be out of the question given his credit history. He appears to want to turn over a new leaf. What would you advise?”
Paul Hunt, head of marketing at Platform
“Unfortunately your clients’ situation is not uncommon in today’s climate, as unsecured debt levels continue to rise, many people have relatively small levels of adverse credit. Having said this, despite the arrears difficulties, at Platform we have a number of options available to them.
The first, on our non-conforming range, enables the client to remortgage up to 90 per cent of the value of the property across our almost prime, minor and light adverse range. This means that even if two mortgage payments have been missed in the last 12 months or 1 in the past six months, there are suitable products available starting from 6.85 per cent.
As it is unclear how long ago the mortgage payments were missed, if it was longer than 12 months ago, your client can be moved onto our conforming range of fixed rate and tracker products and can take advantage of deals up to 90 per cent LTV with rates starting from as low as 5.55 per cent
On both our conforming and non-conforming buy to let product ranges, we will base our rental assessment calculation at 125 per cent on the pay rate on all products lasting three years or more.”
Sue Cox, business manager at Bananas Inc
“There are a number of products that could work for your client that all specialise in lending to those with sub-prime mortgage arrears. One that he might well be advised to consider is offered by Beacon Homeloans. It advances up to 85 per cent LTV and will allow four missed mortgage payments within the last 12 months, or two missed within six months, even if with a non-conforming lender.
Given his difficult credit rating, the product will not be cheap. The rate is 7.75 per cent fixed for two years, plus in his case 0.25 per cent because his arrears are with a sub-prime lender. There is an Early Repayment Charge of 6 per cent for the fixed-rate period and the arrangement fee of £795 can be added to the loan.
As with all such cases you would be well advised to research carefully your client’s financial situation. Make sure that he includes all his outgoings and makes a full disclosure of his situation. What made him miss the payments on his existing buy-to-let mortgage? You want to make sure that the same thing does not happen this time around. That would seriously impact his credit scoring and make future financial products, if available to him, even more expensive.
It would not hurt to also quiz him about his proposed buy-to-let investment. I do not think it hurts for the financial adviser to give an impartial and often well-informed opinion on a client’s BTL venture.
Too often BTL investors seem to overlook the basics when making an investment decision.”
Justin Caffrey, managing director at c2-financial
“Most of c2’s clients are of the opinion that they will not be able to remortgage when in fact they can.
This specific case will really depend on the number of mortgage payments that have been missed over the last 12 months and the level of CCJs that the client may have acquired over that period.
Many of the sub-prime lenders on our panel will look at mortgage arrears on a buy-to-let remortgage and, in a lot of cases, can go as high as 80 per cent LTV with 75 per cent LTV available for those with very poor credit ratings. The client could also use the money raised as the deposit on a new buy-to-let and raise the mortgage on that property with the same lender using the portfolio limits that are on offer.
A lender offering a straightforward lending criteria for this client is SPML, who will offer the client up to 75 per cent of the value of the property, even though he may have missed 4 payments over the last 12 months (including 1 in the last 3). Also, he can have £10,000-worth of CCJs registered in the last 2 years. However, if he would prefer 80 per cent LTV, he would need to have missed only 2 payments and only have £3,000 worth of CCJs.
The broker should ensure he has a full and accurate picture of the client’s financial circumstances. The client would be doing himself a big disservice if he decided to avoid disclosing all his commitments in the hope that this might help his mortgage application through.”
