Tracey Hill is product development manager at SPML
“At SPML we have a full range of mortgages which will suit most people’s circumstances. In Jessica’s case, she has two defaults which were registered eight months ago. At SPML we will allow up to £1,000 in defaults or CCJ’s on our almost prime range, as long as they were registered more than six months ago.
Using SPML’s REAL DTI Affordability Calculator, Jessica would be able to borrow the required £120,000, presuming she has no other credit commitments. Depending on how long she wishes to fix her rate she has a number of options within the almost prime range. We have a two-year fixed rate at 7.24 per cent with a 1.5 per cent fee or two and three-year fixed rates both at 7.49 per cent. All have no early repayment charge overhang.
As Jessica had no problems meeting her financial commitments while her rate was fixed, any one of the above options should allow her to get her finances back on track.”
James Cotton is mortgage specialist at London & Country
“Jessica’s case is a perfect example of the payment shock that many borrowers could face when their low fixed rate deals come to an end. Her priority must be to remortgage on to a new deal that would give her a lower interest rate and lower monthly payments.
Her first port of call should be her existing lender – switching deals with it will be an easy process, which should require no additional underwriting or credit checks.
As far as switching lender, getting a mainstream lender to ignore the defaults will be a tougher job now than it was a few months ago. Abbey is often worth considering in these cases, but its treatment of credit blips has become stricter recently.
She may have to turn to the near-prime market where her defaults should cause no problems – assuming they are not for mortgage payments. Deals to consider include The Mortgage Works three-year fix at 6.64 per cent with a £895 fee, up to 75 per cent.”
Roy New is a London-based sole broker
“This is going to be quite a common problem, with the many borrowers coming off low fixed rates and onto a SVR, which has cascaded upwards from a low base.
I assume Jessica has maintained her mortgage payments and would look to see if her current lender will allow her to switch to interest only for six to 12 months, enabling her to sort out her financial status, discuss the defaults with the appropriate companies, and come to a repayment agreement. We will then be able to review the situation from a far more favourable position.
It’s not prudent to remortgage every case with a non-conforming lender as the associated costs, fees and rates will outweigh any immediate savings.
Don’t forget that good service will be repaid with referrals and introductions from fee-paying clients.”
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