The client: A self-employed building contractor who runs a successful company, but who has a bad credit history due to not keeping on top of his personal finances. The client has many late payments due to direct debits not being set up. Regardless of income, most high street banks will decline this. He also had a few defaults around 5 years ago for missing payments on phone contracts when he was younger and was unaware of the future problems this would cause. Like many people, the client did not anticipate that this would be such an important factor when getting a mortgage.
The property: The client wanted to buy a 3-bedroom flat in South London worth £600,000.
The finance: The client had saved a £90,000 deposit which was 15% of the property. Due to not having a major understanding of finance, the client left it to me to steer him in the right direction. I recommended the below :
– A 2-year mortgage (as after 2 Years I believed we would be able to approach a high street bank)
– Capital Repayment to bring the balance down to 80% as this would help the chance of going with a high street bank in a few years
I needed to get this agreed with a specialist adverse credit lender who ignores defaults over 3 years old and also takes a view on missed/late payments in the last 2 years. I spoke with a few lenders that were happy to help, so the next part to deal with was the interest rate.
The Application: Due to this type of lending usually taking longer and also needing a lot of paperwork, I asked to be put in contact with the accountant to avoid delays. I also asked for a vast number of documents from the client. Once the application was submitted, which enclosed all the necessary documents and information, the mortgage offer followed within 11 days which was below the 22-day average for that lender.
Property value: £600,000
Loan amount: £510,000
LTV: 85%
Rate: 2.79% 2 year Fixed
Term: 30 Years (in line with retirement of the client)
Lender facility fee: £999 added to the loan
Monthly payment: £2,098
Detail correct at the time of sourcing their deal.
Ashley Slade
