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Saffron offers self-employed 90% LTV with one years’ accounts

by: Heather Greig-Smith
  • 06/06/2017
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Saffron offers self-employed 90% LTV with one years’ accounts
Saffron for Intermediaries has begun offering self-employed borrowers 90% loan-to-value (LTV) with one years’ accounts.

Saffron has also enhanced its first-time buyer and owner-occupied mortgages by raising LTVs and launching fixed rate and low-cost discounted rate options.

The lender’s self-employed offer was previously up to 85% LTV. The variable rate is currently 3.99%, discounted 1.4% on the Standard Variable Rate for five years with an arrangement fee of £1,250.

Anita Arch (pictured), head of mortgage sales at Saffron, said: “These enhancements offer significant benefits for most borrowers be they purchasers, remortgaging, first-time buyers or self-employed.

“All mortgage applications will be assessed on their own merits by an underwriter and we guarantee a fast and personal service.”

Mark Dyason, director of Edinburgh Mortgage Advice, said the five year tie-in to a variable rate means borrowers will need to think carefully. However a low 1% early repayment charge may mean it is still attractive.

He pointed to the fact that Halifax will consider borrowers with one years’ accounts and one year projections but that not everyone will be able to supply that.

“That’s where Saffron is pushing the envelope,” he said. “It’s a solution but I don’t think it will fit for everyone. You could pay an accountant to do one year accounts and projections for you and get a two-year fix from Halifax.”

However, Dyason said the option may appeal particularly to remortgage customers. “On the remortgage side there is a chance that there’s a space in the market for those who have just set up a company and need a solution – with a 1% tie in if it gets too expensive they could pay that [to exit].”

Ray Boulger, senior technical manager at John Charcol, said Saffron’s manual underwriting approach means it can adapt more quickly than many lenders. “They will look at non-standard cases in a more sensible way,” he said.

As activity dips in the market, Boulger said lenders will need to be creative if they are to maintain volumes and hit the targets they have set for themselves.

“We are generally seeing lenders tweak criteria in a number of areas that are helping in the margins, though nobody is making massive criteria improvements.

“There are areas of the market that were tightened up after the credit crunch that are still tighter than they need to be, in my view. The challenge for lenders is to find areas where they can tweak criteria but still lend sensibly. Manual underwriters can do that more easily.”

A survey carried out by Paragon, of 200 brokers, found that 24% of mortgage applicants seen by brokers in quarter one were self-employed, a 1% rise on the previous quarter. Those with complex income requirements accounted for 17% of applicants seen, an increase of 2% on the previous quarter.

The other enhancements announced today by Saffron include a cheaper first-time buyer five-year fix at 3.67% for 95% LTV with no arrangement fee. In addition, it now offers a remortgage rate of 1.15% to 60% LTV (which can also be used for purchase) or 1.25% to 80% LTV.

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