Some think it’s the new name for sub prime, whilst many others think it’s purely a way of attracting business that will fit the credit scoring lenders that allow a lower score or non credit scoring lenders that offer a more manual approach to underwriting.
Sub prime it is most definitely not.
However, there has been an interesting shift of late with some mainstream lenders allowing some small blips on a customer’s credit history, as they endeavour to attract more business and as this type of criteria is relaxed.
So today, there is really no right or wrong answer.
Complex prime does what it says on the tin, the ‘Ronseal’ of the mortgage industry. This is not a new term and many of us specialised in this arena back in the 90s.
It’s a simple philosophy, don’t say no to an enquiry, unless of course clients have a “won’t pay” attitude to their finances and have missed a number of recent mortgage payments.
Our relationships with the lenders allow us to speak directly with the decision makers. Whilst, in the main, these are not the usual high street lenders, we are finding that more recently the larger providers are also looking at introducing ‘exceptions’ to their credit criteria rulings.
Usually, a complex prime application will have failed the high street lenders credit scoring systems (often for no apparent reason) or will be outside of normal policy in property, scenario or complexity. The client may not be on the voters role, may have no credit, or too much.
Yet, more recently, the overall scenario is becoming the degree of complexity itself – recent inheritance, need to remortgage to repay personal and family debts, declination due to the six month ownership rulings. Or, perhaps, clients are looking to port a mortgage but the lender’s current criteria has changed and it declines to assist. It happens.
Other scenarios include lending into retirement, cross collateral charges, income from investments, buying an ex-Methodist church or old schoolhouse. The list is endless.
Every case is unique and I could easily provide up to ten such examples a day which find their way across our desk. The underlying fact is that if the case makes sense and we can prove affordability, a lender will probably look to assist.
Some recent examples include:
– The client started a new business 15 months ago. The first year’s pre-tax profit of £37,000 shown on the accounts with a profit forecast for £50,000+ for the current year were demonstrated by the accountants who assess the books monthly. The client had secured a contract with large retail company majoring in baby clothes. The mortgage requested was £120,000 on a purchase price of £200,000. It was agreed with a lender at a 2.89% discounted rate. Bank statements for the business showed healthy progression. This case had been declined by four high street lenders.
– The client was remortgaging a property with land on which there were derelict buildings. These had been converted into residential living accommodation as one main unit. The value was £950,000 and the mortgage needed £290,000. Income from some five differing sources (all accountable) amounted to £75,000. It was agreed with the lender on a residential basis at a competitive rate. Two-year arrangement with no ERC. A number of lenders were unwilling to assist due to conversion work and type.
– Client is chair of three companies, aged 70 and still very active. He was looking to purchase a property at £595,000 and required a £325,000 mortgage on an interest-only basis over ten years. Income was variously proven at £85,000, plus client has SIPP with a value in excess of £400,000 and investment balances at a good level. The case was resolved at 4.19% with a three-year ERC. The lender took the view that other unencumbered investment properties would provide them with a solid exit route.
More than ever before, and especially in the current climate, every case counts.
Close relationships and communication are key. If the application is strong and the lender is provided with all of the information at the outset – credit report, accounts, property details, etc – there’s a good chance the application will be one it looks to proceed with.
Dale Jannels is sales and marketing director of AToM
