Mark Tiley is marketing manager at GE Money Home Lending:
“Given his employment status, self-certification appears to be John’s best option. However, the unsatisfied CCJs will affect his credit rating. There are a number of mortgages available to John, but he must be aware that he’s likely to face higher interest rates then someone with an unblemished credit history.
There are some specialist lenders who are only concerned with outstanding CCJs, so one option John could consider in order to improve his credit rating and have access to more competitive rates, would be to repay his existing CCJs. This would not only reduce his risk profile, but would also mean that there would be a wider range of self-cert mortgages available to him.
As with any self-cert mortgage, John would need to prove that he could meet the repayments. Some lenders would use an affordability calculator to assess how much John can afford. Some lenders would not require John to evidence his income, however, depending upon the assessment criteria of the lender he may be required to provide evidence or his income for example with an accountant’s letter.
With the deposit that John has available and if all CCJs were satisfied before completion, providing John had no other arrears or bankruptcy history, he could borrow up to 90 per cent of the property value with a lender such as GE Money Home Lending through its igroup self-cert mortgage. However, if the CCJs were not satisfied, depending on the number of CCJs John has it is likely that he may only be able to borrow up to 65 per cent.
Given his credit history, downsizing his property is probably a sensible option for John, as he will be able to build up his credit rating while he repays a mortgage that he can afford. However, it would be advisable for John to seek advice from a reputable IFA or mortgage broker before making his final decision.”
Ian Batterbee is director of Clancy Lesurf:
“John has had a difficult time, and the first thing we would do is to reassure him that his new mortgage will not stigmatise him for life, and is just a temporary arrangement, designed to help him rebuild his credit rating.
John needs a loan of 80 per cent of the value of his property. Lenders will provide up to 90 per cent at normal or close to normal terms where CCJs, with no unusual circumstances, are two years old or more. So, in principle, no problem in getting a mortgage – it is important for John to remember that the more information he can make available, by way of accounts and bank statements, the quicker the process and the better the terms will be.
We should approach his existing lender to find out what is possible with them. John needs to decide what type of mortgage would best suit him – fixed or variable, repayment or interest only, and the term.
Once we have established John’s requirements, we would recommend that any product, either with a fixed rate or discount, is restricted to a medium term, probably no more than three or four years, and any tie-ins or penalties are minimised.
If we are not going with the existing lender we should speak to packagers, at minimum using them as a sounding board. Specifically, the types of product that I would consider are Mortgages plc’s discount tracker rate of 4.95 per cent for 12 months, then reverts to SVR for another 24 months or Amber Home Loan’s fixed rate of 5.05 per cent, three years, redemptions until the end of the fix, and no extended tie-ins.”
Kevin Anderson is director of Budge and Company:
“John has got into some financial difficulties. We are assuming that he has no other defaults and arrears. The unsatisfied CCJs will mean that he is treated as a heavy adverse case. This means that even if he pays off the CCJs from the proceeds of the sale of his property, his new mortgage rate will be higher than the normal rate he would pay.
If John wishes he could self-certify his earnings as he is only borrowing 80 per cent of the purchase price of the property.
John can expect to pay between, 7.15 per cent and 7.3 per cent for his new mortgage. He will have an arrangement fee but this will be similar to a prime lender and this can be added to the loan and a survey fee.
John could choose a two-year discounted rate or a fixed rate. After the end of the discount has ended, John could remortgage and with the satisfied CCJs he should be able to remortgage to near-prime. This will reduce his costs considerably.”
