From tomorrow, the bank will offer mortgages starting at 2.99% to borrowers such as the newly self-employed, workers with multiple jobs, or applicants employed on a zero-hours basis.
‘brokers are invited to convince Secure Trust Bank of the strength of the case’
In a return to the traditional approach of obtaining a mortgage, where a borrower would smarten up for a meeting with the bank manager to convince them of their creditworthiness, brokers are invited to convince Secure Trust Bank of the strength of the case. With direct access to experienced underwriters, brokers will be able to ‘sell’ the merits of their applicants’ circumstances, without the hassle of putting on their best suit.
Managing director Esther Morley (pictured) said: “We want to empower intermediaires. We don’t expect applicants to fit into nice little neat boxes. As long as there is a story and we can understand the explanation behind it, we would look to do the deal.”
The bank says it is looking at self-employed borrowers slightly differently than the rest of the market. Borrowers don’t need two or three years’ full accounts to have a mortgage with Secure Trust, it prefers to take a flexible approach.
Criteria are in place, but Morley and her team are still keen to take a look at applicants falling outside the parameters. “Applicants who may have been employed for years in the same industry who then decide to set up in business for themselves won’t be turned away for simply having less two years’ accounts,” said Morley.
Brokers with contractor clients will find a similarly flexible attitude to their circumstances. Income is calculated using the standard formula; daily rate multiplied by five and then 46 weeks. However, Morley pointed to the fact that contractors often work for six months and then take a two month holiday before starting their next job. This is a scenario the team would be happy to take a closer look at.
Complex income welcomed
Secure Trust Bank also plans to focus on mortgages for borrowers with income complexities.
The bank is happy to accept zero-hour contract workers, applicants using investment income and borrowers with multiple jobs.
Up to 100% of bonuses, commission and overtime will be considered. Credit blips are another element of applicants’ circumstances which Morley’s team will meet head on. While the bank’s criteria will state the applicant cannot have more than two CCJs and defaults worth a combined value of £500 in the last 24 months, none in the last 12, the team can be flexible on these points where suitable. Communication and mail order defaults will be ignored.
The bank wants to making a lasting positive impression on brokers, so its first steps into the intermediary channel will be cautious. It will distribute solely through Mortgage Advice Bureau to begin with, cap loans at 80% loan-to-value and launch with a handful of products. Initially, two-, three- and five-year fixed rates will be offered on a capital and interest basis with rates ranging from 2.99% to 5.44%. It will offer purchase products and a fee-assisted remortgage range.
“We are very aware that as a new entrant into the market we need to be able to deliver on service,” says Morley. “We have deliberately constrained our distribution and product offering.” The bank will roll out its distribution around quarter three, if its service is in robust shape. Whole of market is an ambition, but as yet there are no set timescales.
Entering the market with confidence
After the dust has settled, the bank wants to develop a later life lending proposition. To begin with, all mortgages in the standard residential range will be subject to a maximum age of 85.
Morley would not discuss the level of procuration fee the bank would pay, but said brokers could be assured the commission would be competitive against the bank’s peer group and they would be rewarded fairly.
The bank will use a platform supplied by software firm DPR which has been tailored to support its proposition. Described as state-of-the-art, it will allow brokers to provide information to underwriters in a ‘slick and efficient’ way.
Right now, the bank has no plans to access the capital markets for funding – it is solely reliant on savings deposits to fund its loans.
Morley said: “This is a really exciting time for Secure Trust, it is the creation of a new business, it is bringing something a little bit different into that market. We are part of a well-funded bank with stability behind it, which allows us to enter this market with confidence. We are really looking forward to it and can’t wait to get going next week.”