Ron is currently looking to remortgage his property which is worth £310,000 and take a loan of about £232,000 (75 per cent loan-to-value), but is concerned that with one outstanding payment in arrears due to a short period of illness, his choice of lender will be restricted. What are his options?
Thomas Reeh is chief executive at blackandwhite.co.uk
Ron is correct in his assumption that his choice of lender will be restricted by the missed mortgage payment which remains outstanding.
Nevertheless with an income of £50,000 per annum and equity in his property in excess of £75,000, he will still have the choice of a number of specialist lenders, albeit at an interest rate premium.
Currently – and depending on when the mortgage payment was missed – Future Mortgages and Platform would play ball. There is a three-year fixed rate deal available from 7 per cent to 7.64 per cent with completion fees of £995.
Similarly, a discounted variable rate is available in the range of 7.59 per cent to 8.31 per cent. If Ron is able to prove his income and it has been stable in recent years, these rates could be improved.
Had Ron been in a position to clear his arrears more than six months ago, his current lender may look upon his request remortgage request more favourably.
David Hollingworth is head of communications at London & Country
The client has a seemingly reasonable cause for the missed mortgage payment and I’d normally be pretty hopeful that there would be a fair chance of sourcing a prime deal for Ron.
However, I would have expected the outstanding payment to have been resolved quickly.
As it remains outstanding, he could find that prime lenders will take a much less forgiving stance, especially in the current climate, although he should certainly approach his existing lender.
Otherwise it will be necessary to turn to non-conforming lenders. It is vital to establish when the payment was missed and he should settle the arrears immediately. If the missed payment is very recent, however, he will struggle.
The other challenge is the level of borrowing required, but he could approach lenders using affordability like Platform or First National.
He should be warned that rates are higher now and he could find that his existing lender’s standard rate compares favourably.
Sarah Arfaoui is product development manager at Preferred
Looking at the amount that he would like to borrow, we would consider Ron on our ONE product, due to the fact he only has one outstanding item of adverse credit.Based on current LIBOR rates, Ron could borrow up to £241,900.
He also has a choice of two and three-year fixed rates with standard and higher arrangement fee options, starting from 6.94 per cent. These can help provide payment stability, allowing him to plan for his monthly commitments.
If he wishes to self-certify his income, then rates will start from 7.14 per cent.
Ron’s fears regarding having a limited choice of lenders due to his adverse credit might be well founded given current turbulent market conditions and changes in lending criteria.
At Preferred, we have relaunched our product range with reduced reversionary rate margins and, as a responsible lender, we would consider each customer on a case-by-case basis.
