Tomorrow the lender launches phase one of that project, putting to use the £200m of deposits it has amassed in the first six months of deposit-taking.
Speaking to Mortgage Solutions, managing director for mortgage lending Matt Andrews (pictured) said the bank strongly believes that the mortgage market needs challenging to offer non-standard borrowers access to better pricing and products.
“Today’s society is much more fragmented than it was: people move home and job more often, which doesn’t always sit well with mainstream credit scoring,” he said.
Competitive pricing for the underserved
With a two-year fix starting at 2.94%, a five-year fix at 3.44%, a two-year discounted rate and a lifetime tracker, the lender is targeting a range of customers it feels are underserved. These include complex self-employed borrowers, contractors, remortgagors, first-time buyers with family deposits, the older generation and those who have experienced credit blips.
Loan-to-values will be up to 80% (60% for interest-only), and maximum loan size £1m, with a maximum term of 35 years and lending up to 85 years of age. The products will be available in England, Wales and mainland Scotland – an area Andrews said is often overlooked by specialist lenders.
Procuration fees will be 0.5% on the first charge range.
Tomorrow’s launch is phase one of the process, said Andrews, who joined Masthaven from Bluestone in April. It aims to match the best offers already in the market on rates and criteria.
In phase two, Masthaven intends to innovate in four specific customer areas and launch a suite of buy-to-let products, including options for portfolio landlords. Those products are expected in the fourth quarter.
The lender intends to build a multi-billion pound mortgage business and passing the £1bn lending mark is its first major milestone after the launch.
Andrews points to the 100-strong team already in place in Soho – despite being a ‘new’ first-charge lender. He adds that the hope is to replicate the speed needed in bridging and second charge lending. “We can provide pretty quick service that should be market-leading.”
Distribution
Initially the products will be available through a select set of intermediaries, extending to the full market in three to six months. Those in the first phase are second charge distributors it already has relationships with which also handle first charge business – Brightstar, AToM and Complete FS.
Masthaven is also using specialist distributors Just Mortgages and Legal & General’s Nouveau mortgage club.
“Legal & General are a fantastic partner for us so we are giving them a month exclusivity to get the products out there,” said Andrews. “As quickly as we can we will roll out to full UK distribution using other mortgage clubs and networks.”
The criteria
Masthaven’s minimum income requirement for employed borrowers is £12,500. For self-employed borrowers, all underwriters have been trained to understand accounts and two chartered accountants in the team will interpret complex accounts.
Andrews said key innovations are the ability to take nine months’ certified accounts and make a full-year projection subject to no more than a 20% increase on the last year. “That is absolutely unique,” he said.
Spotlight on self-employed
To go one step further for self-employed borrowers Masthaven is looking at ideas around aligning mortgage payments with the peaks and troughs of the borrower’s cash flow which it hopes to deliver soon
Contractors with a three-month minimum current contract will be considered with one month remaining. Older borrowers will be considered on an affordability basis, taking pension income into account, and those who have experienced credit issues because of circumstances outside their control, such as relationship breakdown or job loss, are high on the bank’s list of targets.
“We don’t credit score and use 100% manual underwriting,” said Andrews. “We want to bring strong rates to these customers. We have tried to really simplify our products for intermediaries. Pages of different product tiers are difficult to interpret – we have three product categories which are super simple.”
