There is a perception among some brokers that arranging mortgages for clients with an impaired credit record involves significantly more work, time and effort than placing ordinary mortgage deals and many brokers therefore avoid them.
But that perception isn’t necessarily true anymore, as Devon-based mortgage broker Jason Matten recently discovered when he submitted an application to Magellan Homeloans on behalf of a client.
Dealing with a debt management plan
Jason, who works with the Mortgage Advice Bureau, was approached by a client seeking a mortgage of £135,000 on a property worth £272,000. With such a low loan-to-value, Jason thought this would be a straightforward deal, until he discovered there was a debt management plan involved.
Jason explains: “In so many ways this deal was about as easy as it gets. My client and his partner both had good jobs and incomes and they wanted to repay the mortgage over 14 years. However, the debt management plan ruled out pretty much all high street lenders, even though it had been paid off early. I therefore knew this was a case for a specialist lender.”
Jason contacted specialist distributor Brightstar, to talk through the deal. Having considered the various options available, Jason decided the most suitable way forward for the borrower was with Magellan Homeloans, working with Brightstar who helped to package the application on his behalf.
Letting a packager take the strain
Kara Cordrey, sales support team leader at Brightstar, who took responsibility for the case, explains what was involved: “When the case was submitted to us by Jason we were able to get a decision in principle from Magellan within 24 hours. We then let Jason know what information we needed from his client and began the process of packaging the deal.
“The only issue we had to resolve was obtaining proof of the deposit, which was being paid for from the sale of some shares. Magellan made their offer on the provision of proof of the deposit, which enabled us to keep the deal moving forward.”
Yvonne Turnbull, the underwriter at Magellan, explained that the quality of packaging meant that the application was processed efficiently.
No more hassle
Jason Matten concluded: “In many ways today’s regulations means that all mortgage applications, be they mainstream or impaired credit, require the same checks to be undertaken and documentation to be provided. Brokers shouldn’t avoid impaired credit deals because they think there’s more work involved – that simply isn’t true anymore.
“What’s more, support from a packager removes most of the pressure of paperwork and lets you focus on your primary role of advising clients.”