He previously missed two mortgage payments in early 2005 and has an IVA dating back to March 2002. The mortgage payments have since been paid and the IVA was settled in December 2002. He also has a CCJ for £322 dating from 2005. He is looking to raise a loan of £180,000 to clear his current mortgage and leave him with £35,000 for home improvements. Having been declined by various high-street lenders, Joe is looking for a fixed or discounted rate with a no extended tie-ins. What are his options?
Mike Pendergast is an IFA at Zen Financial Services
“Missed mortgage payments from Joe are more than 12 months ago, so many non-conforming lenders will be able to help him. He should look out for early redemption penalties when he is researching his new mortgage, as many non-conforming lenders will charge higher redemption penalties when he takes out a mortgage. He is looking for around 50 per cent LTV so this should not be an issue, and there will be no higher lending fees payable. However, he should ensure he is not over committing himself as he is increasing his mortgage – he doesn’t want to miss any further payments with a non-conforming lender.”
Lee Carling is sales support manager at Money Partners
“We can certainly offer a solution for Joe, as his case is not unique. Regardless of his adverse credit history, he would still qualify for one of our near-prime rates.
His mortgage arrears would be ignored as these occurred over 12 months ago and would be classed as historic. As the IVA dates back to January 2002, and was repaid in full in December 2002, we would not consider is as an influencing factor, as it has been settled for more than three years.
Based on the loan-to-value (LTV) and Joe’s desire to obtain a rate without extended tie-ins, our near-prime two-year discounted no overhang product at 5.19 per cent would be a viable option for him. Our risk assessment process on this plan will consider CCJs up to £500 if they remain unsatisfied.
As we specialise in catering for self-employed borrowers, all we would we require is proof of self-employment for clients certifying an income of between £40,001 and £80,000 on this plan.
If the client’s mortgage intermediary files a fully packaged application with us in the morning, then one of our underwriters will have assessed the case and provided an offer by close of business on the same day. A mortgage offer would also be further accelerated if Joe appears on the electoral register as he may well qualify for our E-ID application process, which would also drastically reduce the amount of paperwork involved and speed up the process.”
Alan Lakey is senior partner at Highclere Financial Services
“Joe’s income and high equity level means he will have a wide range of choices available to him. Fortunately the financial problems appear to be behind him, although most lenders are still likely to require an explanation for the missed payments and Individual Voluntary Arrangement (IVA).
Lenders look at the extent of the problems and how long ago they occurred. The IVA is nearly four years old, the CCJ and arrears over 12 months, and many good lenders will be prepared to accept this.
It is assumed that Joe can prove this level of income. If not he may have to follow the self-certification route, although some affordability calculators may allow borrowing on a lower provable income. It is unlikely that there are any outstanding loans or credit card balances and I would be looking at BM Solutions, which can offer a 5.85 per cent fixed for two years, or a self-certification deal at 5.75 per cent discounted for two years. Neither will tie him beyond the fixed/discounted period of the rate.
GMAC-RFC is also offering an excellent 6.14 per cent fixed for two years or 5.95 per cent discounted for two years.
From the compliance viewpoint, the case should be documented regarding current and future affordability as well as why it is non-conforming and/or self-certified.”
