Mike Pendergast is an IFA at Zen Financial Services
“The client is on the limit for most lenders but it is likely that a non-conforming lender should be able to assist. The areas they would be concerned about are the CCJs, the rent arrears, the short time in self-employment and the fact that Mr Downe wishes to self-certify at 4.25 times income.
The client would be best advised to look to a lender such as GMAC-RFC, which will cascade his application and locate the best deal for him from its range based on his circumstances – otherwise he may find that if he is declined by a number of lenders he will not be able to find a suitable mortgage for this reason alone.
GMAC-RFC will assess his requirements and take his circumstances into account, and will offer him its best available rates based on this. It is likely he will end up paying 7 per cent plus but at least he will then be able to work on improving his credit rating and switch to a better rate when he is able to once his rating has improved in a couple of years.
Mr Downe must, however, ensure that any new mortgage loan is affordable, that any income projections are realistic and that he is not making his situation worse by taking on a new mortgage – he may be better off renting for a further couple of years until he has improved his credit rating, which will enable him to attract a lower interest rate and therefore a lower cost mortgage.”
Paul Hunt is head of marketing at Platform
“Unfortunately Mr Downes’ situation is not uncommon in today’s climate, as unsecured debt levels continue to rise, many people have relatively small levels of adverse credit.
A 25 per cent deposit does widen the options available to him, although, with his level of adverse credit, his case would fit onto our light adverse scheme. A choice of rates are available, such as two or three-year fixed rates and a three-year tracker, all with no early repayment charge overhang. These rates start from 6.50 per cent at 85 per cent loan-to-value (LTV).
Often it is difficult for people like Mr Downe to know exactly the level of adverse they have incurred and it is difficult for intermediaries to know whether a client fits a particular lenders’ criteria. Online decision tools, like our ‘clickdecision’, enable intermediaries to find out in seconds whether someone like Mr Downe fits their criteria. In many cases, intermediaries can also then go on to complete an application online.
For a self-certification case on light adverse up to 85 per cent LTV, Mr Downe can borrow up to 4.25 times income and so a total of £170,000 is acceptable. It is also unclear whether Mr Downe’s current mortgage is with another non-conforming lender. If it is, many lenders will not accept this, but at Platform this is allowed on light adverse with no rate loading.”
Alan Lakey is senior partner at Highclere Financial Services
“Not many lenders will accommodate Mr Downe because he fails on a number of typical requirements, such as a minimal self-employed period, the missed rental payment and the CCJs.
Clearly his saving grace is the 25 per cent deposit, which enables him to be considered by a number of specialist lenders. It is clearly difficult to feel confident about a projected income of £40,000 after only three months’ trading and there needs to be clarification about whether this is a projected net or gross income. Given the coming FSA scrutiny of self-cert, the question of affordability raises its head, not least the reason why Mr Daines has previous indebtedness.
Assuming the projected income is net and that there are no loans, hire purchase, or credit card balances lurking in the woodwork, I would consider Money Partners, which will accept the adverse, three months’ self-employment and allow an application from a first-time buyer. It will offer a very reasonable 5.94 per cent fixed for three years with an application fee of £995, which unfortunately cannot be incorporated into the borrowing.
Like most other lenders, this loan is not portable so if this is an important factor, Mr Downe might wish to consider edeus, which offers a portable mortgage but not a fixed rate. Its 6.34 per cent two-year tracker comes with a £699 fee which can be incorporated.”
