The Mortgage Partnership is the latest provider to launch a mort-gage which targets divorcees, but according to some industry experts, there is no need for such specific loans as they can often be accommodated on a standard deal.
But according to The Mortgage Partnership, some divorcees do have difficulty in finding a mortgage.
It found some lenders will reduce the client’s overall income by maintenance commitments and then apply the income multiple to establish how much to lend. The figure is then reduced further by the capital amount of the existing mortgage ‘ resulting in a low total income multiple.
But Rob Clifford, director of Mortgageforce, said: ‘We marketed a divorcee mortgage two years ago and while it increased enquiry levels, the lending was disappointing. In reality clients look at the broader, normal plethora of fixed and discounted rate products. The take-up will not be massive for this type of product. Depending on the client, there is always a better product available.’
Steve Sandiford, head of borrowing products at Birmingham Midshires, added: ‘This type of scheme helps when someone has no choice, but where a divorcee has some kind of income, they would probably apply for another type of mortgage.’
The Mortgage Partnership’s New Start mortgage allows applicants to retain their existing mortgage while borrowing an amount based on their free income. New Start offsets any maintenance costs and the monthly cost of the existing mortgage against income.
John Mawdsley, director of The Mortgage Partnership, expects demand to be high.
He said: ‘The market has not been exploited to the full ‘ this is a basic product and there is a market for it. In 1999 there were 133,000 divorces.’
Charcol was one of the first groups to pioneer the divorcee mortgage with its product which treats maintenance payments as a normal salary.