A new mortgage lender, Magellan Homeloans, is piloting a mortgage service aimed at borrowers who have experienced a one-off life event which has resulted in an adverse credit record.
The lender says that, providing applicants can explain and document the reasons for their financial difficulties and can demonstrate they have had a clean credit history for the last 12 months, it will consider their application.
Magellan Homeloans is headed by managing director, Matt Gilmour, who ran Infinity Mortgages and Unity Homeloans in pre-credit crunch times.
Gilmour (pictured) 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.”
The lender has 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 products are available for purchase or remortgage up to a maximum of £400,000 including debt consolidation, to borrowers in England & Wales over the age of 25 and with a minimum income of £25,000.
Employed, self-employed and first-time buyers are considered, but all applicants must have a clean credit history for the last 12 months .
CCJs, missed secured/unsecured payments, defaults, bankruptcy orders, individual voluntary arrangements and debt management plans considered subject to documentary evidence of the reason for the applicants’ adverse credit history.
There is a 1.5% completion fee (min £995) and a sliding scale of application fees depending on property value.
The 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.
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.
“All applications will be individually underwritten and assessed by our team of underwriters here at our head office in Leatherhead. We will also manage all post completion administration in-house; none of the client management will be outsourced.”