James Cotton is a mortgage specialist at London & Country.
“The first thing Noah needs to do is sell his houseboat. If he gets around £80,000 for this and can put all of it down as a deposit, he will be in a very good position. This will leave him needing a mortgage of around £100,000 to £110,000, once he’s kept some money back for Stamp Duty and other costs.
With one CCJ to his name for £750, Noah will need to get a non-conforming mortgage product, but if this is the only blemish on his credit record, he should still be able to get a decent rate.
Around half, if not more, of his salary comes from commission, so he should find a lender that looks favourably on this. Lenders in the non-conforming market tend to be generous when it comes to commission and bonuses – many accept at least 50 per cent of these and some will take 100 per cent (especially if he has at least two P60s showing a good track record). Taking last year’s earnings as an estimate, his basic salary plus commission gives him earnings of £30,000 and a mortgage of £110,000 is less than four times this.
Overall, he should have a good choice of deals. First National has a two-year discount at 5.39 per cent and a two-year fixed at 5.79 per cent, both available up to 60 per cent loan-to-value (LTV). Platform, via Premier Mortgage Services (PMS), has a three-year tracker at 5.50 per cent. At this rate, borrowing £110,000 on repayment over 25 years would cost Noah £675.50 a month.
Finally, Noah should try and clear his CCJ as soon as possible. Doing this should allow him to obtain a mainstream mortgage deal when the time comes for him to remortgage.”
Alan Lakey is senior partner at Highclere Financial Services
“Unless Noah can sell his boat, he will not have sufficient deposit. Even if he could borrow the £158,000/£178,000 difference, it is unlikely to be affordable. Noah’s fees are likely to be around £4,000 implying a total deposit of £82,000 with a maximum loan amount of £98,000.
With current earnings of £30,000 a year this is just under the 3.5 times income calculation. Because his income is split between guarantee and commission he will not meet the criteria of most lenders and will need to look at the self-certification facilities available with many lenders.
Self-cert is an extremely useful facility which is often spoiled by the lender asking inappropriate questions such as, ‘What portion is guaranteed income, what is bonus and what is commission’. A true self-cert question would be, “What is your total income?’.
We are not told whether the CCJ is recent or satisfied and these important facts will determine what lenders are prepared to assist. Many lenders will if there is a reasonable explanation for the CCJ, however this is a vague concept and it is may prove easier to use a lender which offers a clear adverse policy.
Capital Home Loans offers a 5.30 per cent three-year fixed on its near-prime series. A 30 per cent deposit is required and CCJ’s up to £1,000 are allowed. It does charge a 1.50 per cent application fee so, a possible alternative would be Amber Home Loans’ 5.45 per cent three-year fix with a £599 fee. Clearly, without full knowledge of the CCJ it’s difficult to be precise.
The question of affordability is dependent on the rate and the loan term. Assuming a 25-year repayment mortgage of £98,000 the monthly payments would be around £590/605 which appears to be affordable.”
Hugh Nichols is a partner at Badbury Berkeley Financial services
“Noah has options but they could be limited by the CCJ. I can see no problem in obtaining a mortgage, but the sale of the houseboat would have to occur first, with a substantial part of the money being received used as an addition to the existing deposit.
If the houseboat has a marine mortgage, the amount available may be limited, but with at least £40,000 available a deal could be done. A self-cert deal looks best as it would save problems proving regular income, rates are not scary these days and it makes processing easier and quicker. The CCJ should not be a problem, but will exclude perhaps some of the best deals, and as no information is available as to when registered, it may be ignored by mortgage lenders if historical.
The answer for Noah is get the houseboat sold and then a good intermediary will illustrate his or her skills showing the options that are available to him”
