Charcol has launched a new mortgage product designed exclusively for the divorcee market, by treating maintenance payments as a normal salary without need for a court order.
The product, Divorcee Mortgage, is being offered exclusively through Charcol. Recognising that many settlements are agreed out of court, borrowers are only required to confirm maintenance payments with a solicitor’s letter. Unlike other lenders that typically lend up to a maximum of 75%LTV for maintenance payment salaries, this product offers a standard mortgage for loans up to 80%LTV.
Ray Boulger, senior technical manager at Charcol, said: ‘The Divorcee Mortgage enables those receiving regular maintenance payments from their ex to obtain a loan in their own right, without going through the courts. With maintenance payments treated the same as earned income, this mortgage recognises this reliable but often ignored income source .’
But Rob Clifford, managing director of mortgageforce, said many other lenders also offer good deals for divorcees and that borrowers should be warned that without a court order, their maintenance payment income could stop at any time.
‘This product is not totally extraordinary, as many lenders offer mortgages to divorcees as long as maintenance payments are validated by bank statements. These days, lenders do take maintenance into consideration, even in the absence of a court order, and we have placed around 85% of our cases involving divorcees with mainstream lenders. However, this product does add value for loans over 75%LTV. Most lenders apply an ‘on merits’ approach to loans over 75%LTV, so 80%LTV as standard is a good deal.
‘But borrowers should be warned that if they are receiving maintenance payments without a court order, they could lose out if they suddenly find themselves without this crucial element of their income. The next logical step would really be an MPPI product to protect against losses,’ said Clifford.