Daniel O’Connell is practice principal at Ashley Law ( Newport)
“As the Buckleys are in full-time employment, earning a combined £40,000 per year, a large number of lenders would consider their application, as, based on a 95 per cent mortgage, the income multiple would be less than 2.75 times joint income.
However, they need to make provision for stamp duty and legal fees so if they only have a 5 per cent deposit and no savings, they may need a 97 per cent mortgage if they have to deduct these costs from their deposit. They would also have to budget for a valuation fee, as paying for this upfront would give them far greater options. Then there are application fees and higher lending fees, although these can be generally added to the loan.
Knowing if the CCJ is satisfied or not is significant. Although some lenders will accept an unsatisfied CCJ, the Buckleys would have a far broader choice they did satisfy it. In this respect, and bearing in mind the CCJ is relatively small, it would be in their interests to satisfy the CCJ if they have not already done so.
If they can find extra funds to pay for the associated costs, then there are some excellent deals on the market for up to 95 per cent loan-to-value (LTV). Principality has a two-year discount with no extended tie-ins, which would mean an initial rate of 4.49 per cent. Assuming the Buckleys wanted a 25-year repayment mortgage, it would mean a monthly payment of around £580 (without insurances). On the premise that the couple do not have any specifically large outgoings, this should be affordable based on their salaries.”
Paul Hunt is head of marketing at Platform
“In the last couple of years we have seen the rapid growth of a product area within non-conforming lending called near-prime. These products are designed for people, like Mr and Mrs Buckley, who fall into the gap between traditional high-street lenders and non-conforming lenders. It is an area that is rapidly becoming popular with intermediaries and many lenders, not just those specialising in non-conforming, now have near-prime type products to try and meet the increasing demand.
Failed credit scores and minor credit problems are the main areas that near-prime products can be at their most competitive and advantageous for people such as Mr and Mrs Buckley. Platform’s most suitable product appears to be our near-prime product, which allows up to £500 of CCJs and any defaults, as long as they were registered over a year ago. However, if the CCJ is more than £500, but less than £1,000, Mr and Mrs Buckley’s application would fit our minor adverse criteria.
Although the clients appear to be first-time buyers and the loan-to-value is high at 95 per cent, we will not ask for bank statements. Due to our three times joint income multiple, the maximum they could borrow is £120,000 and so the mortgage they actually require is well within this figure. Their application will also be on a full status basis.
It is vital brokers recognise that many more clients who have some sort of minor credit problem will be coming to them for a mortgage. Therefore it is important they are confident in discussing the near-prime options available in today’s market and understand the relative merits of each lenders offerings.”
Ian Batterbee is managing director of Clancy LeSurf
“The clients have more than a few options. The first thing I would do is to reassure the Buckleys that they can buy this property and the issue of their CCJ is reconcilable.
Most lenders today are prepared to accept applications with ‘adverse credit’, and this case would be considered ‘light adverse’.
I would like to know the value of the CCJ. Many mortgage lenders are sympathetic regarding CCJ’s, provided that they are:
- For a relatively small amount – no more than £100, for example.
- Were incurred longer than 24 months ago.
As far as multiples go, they are fine – it’s just a matter of clearing the CCJs with the lender.
Most mainstream providers will look at CCJs, but oddly there are no strict guidelines, and each case is viewed on its individual merits.
GMAC-RFC would be happy with this case, and would offer a rate of 5.19 per cent fixed for two years. This product has an arrangement fee of £595, and the clients would be expected to pay for a valuation of £250, and their own legal fees.
It has a redemption penalty of 3 per cent during the fixed period, but is unusual in that it allows overpayments up to 25 per cent per annum.”
