New lender launches adverse credit range

Applicants that have experienced one-off life events such as redundancy, a divorce or an accident and can explain and document the reasons for their financial difficulties whilst demonstrating a clean credit history for the last 12 months will be considered by Magellan.

Matt Gilmour, managing director of Magellan Homeloans, said: “Magellan Homeloans is opening-up a new route to home ownership by making mortgages available to borrowers who can demonstrate they have regained control of their financial affairs.

“Our philosophy is that we understand people hit difficult patches which can lead to financial problems.

“What’s important to us is the applicant’s ability to explain their difficulties and demonstrate how they have been able to restore financial stability so they can now afford a mortgage.

“In our opinion, a short-term financial wobble should not preclude borrowers from mortgage finance on a long-term basis. We’re delighted to be piloting a new proposition which gives credit impaired borrowers a real chance to obtain mortgage funding once again.”

Magellan is offering borrowers a choice of five products, each accommodating different levels of credit impairment depending on the loan to value ratio.

The maximum LTV is 75% and all products have the same pricing, which is currently 8.55% (LIBOR + 8.00%).

The product range is a available for purchase or remortgage up to a maximum of £400,000 including debt consolidation and is available to borrowers in England & Wales over the age of 25 and with a minimum income of £25,000.

Magellan said it will underwrite all applications manually without the aid of credit scoring.

Clive Willson, sales director at Magellan Homeloans, said: “Our product offering is very straightforward: we have a single rate across all products with the LTV determining the level of allowable credit impairment.

“All borrowers must provide a fully documented adverse credit explanation (‘ACE’) and affordability will be rigorously stress tested on a capital repayment basis.”

Magellan Homeloans’ new service is initially being piloted via a panel of mortgage networks which include Sesame, Intrinsic, IN Partnership, Pink Home Loans, First Complete, Homeloan Partnership, Mortgage Advice Bureau and The Whitechurch Network.

Rob Jupp, CEO of Brightstar Financial, which will provide support for Mortgage Advice Bureau and Intrinsic, said the market had been waiting for a lender to put together a proposition which recognises the needs of clients previously shut out of the lending market.

Jupp said: “At a time when the computer dominates mortgage decision making, it is so refreshing to see a new lender with a proposition which not only recognises the plight of those who have received the brush off from the high street over the past five years, but has clearly had the approval of the regulator to launch a set of products which targets people who have suffered financial hardship due to unforeseen circumstances.

“We have been pushing for some time for help for people who have suffered financially through redundancy, bereavement or loss of their businesses and for whom the high street is not interested because the credit score is king.

“I think understanding is dawning that leaving so many people with previously unblemished records out in the cold needed to be addressed.”