Paul Hunt is head of marketing at Platform:
“Unfortunately Mr Gumble’s situation is not uncommon in today’s climate, as unsecured debt levels continue to rise, many people have relatively small levels of adverse credit.
With only a 5 per cent deposit it does limit the options available to him. However, this is a case that will be considered by us on our high loan-to-value (LTV) product on a full status basis and either a two-year fixed rate or three-year fixed or tracker rates, all with no early repayment charge overhang, are available. These rates start from 6.17 per cent.
Often, it is difficult for people like Mr Gumble to know exactly the adverse they have incurred and it is difficult for intermediaries to know whether a client fits a particular lenders’ criteria. With clickdecision, Platform’s online decision tool, intermediaries can find out in seconds whether someone like Barney Gumble fits our criteria.
Both applicants are first-time buyers and the lending policy allows them to borrow up to 95 per cent. This is not a self-cert case as Mr. Gumble can prove his income, and Platform will take his full commission into account. His partner’s income can also proven and therefore the joint income multipliers of three times joint allow the couple to borrow a total of £177,000 which is adequate on their £175,000 request.”
Ramona Leavers is marketing manager at All Types of Mortgages (AToM):
“In the first instance AToM would need to ascertain when Mr Gumble’s CCJ’s were registered and whether or not they have been satisfied. Some lenders may choose to ignore these if they have been satisfied or if they were registered a long time ago.
Therefore, assuming Mr Gumble’s CCJ’s have been satisfied or have been registered over two years ago, and assuming he currently rents through a private landlord, Mortgages plc would be prepared to assess this case. Mortgages plc not only ignores CCJ’s of this nature, but it do not require a landlord’s reference when assessing first-time buyers.
Mortgages plc’s near-prime plus product would be the best route for Mr Gumble and his partner as the lender will allow £250 worth of CCJ’s that are current i.e. those that have not been satisfied in the last two years. Mr Gumble and his partner would be able to take a two-year fix on the near-prime plus range fixed at 6.45 per cent (this rate does not have a higher lending charge but does have a loading as a result).
The applicants may choose to take a rate with Mortgages plc that does have a higher lending charge, as this will reduce the rate to 6.1 per cent (two-year fixed). However as the higher lending charge can not be added over 95 per cent LTV, the clients would have to pay this (around £2,500) upfront along with the £599 arrangement fee.
Alternatively if the applicants fail Mortgages plc’s affordability calculator, Unity Homeloans may look at this as it offers a 3.5x joint income.”
Kim Barrett is proprietor at KS Barrett & Associates:
“Four CCJ’s totalling £2,500 is not a good advert for any applicant wishing to obtain new mortgage financing.
Most lenders would insist the CCJ’s are repaid before any application for a new mortgage could be considered. However, some will accept an application with the CCJ’s still outstanding, although they may curtail the LTV ratio to 85 per cent. The 5 per cent deposit saved may be best used repaying the outstanding CCJ’s.
Assuming the amount of mortgage needed, of £175,000, represents 95 per cent of a potential purchase price, the 5 per cent deposit would represent approximately £9,250. Repaying the outstanding CCJ’s would reduce this sum to £6,750. The applicants could probably save a considerable sum in the period between finding a property to purchase and the completion.
Any lender would also wish to know how the five month’s arrears occurred but the problem could be resolved if the reasons were genuine.
The six-month concurrency of employment shouldn’t be a problem provided he is in permanent employment. However, it may be reasonable to expect a lender to take 50 per cent of the commission into account and use an income of £25,000.
To achieve a level of borrowing of £175,000 a lender would need to be working on a lending multiplier of five times the higher income of £29,000, plus once times the secondary income, of £25,000. This enables the applicants to reach a level of borrowing of £170,000 so, the lending multiplier for the first applicant would need to be slightly in excess of five times. Alternatively, 3.25 times joint incomes would need to be used as a multiplier. Both would take the applicants to the extreme of lenders income multipliers and, given the track record of one of the applicants, any lender would have to be fully satisfied of the case presented.
It won’t be easy to present a case to any lender. There is a chance that a lender specialising in the adverse market may look at the case.”
