Speaking on a Mortgage Brain Criteria Masterclass, Graham Laverty said: “A big message here, as an ex-broker, would be don’t disregard any cases and don’t say no to clients before you’ve tried us because we can, and we will, lend more.”
He pointed to an example of a broker who was helping clients with a £1m+ property purchase at 90% loan to value (LTV) with a joint income of £190,234.
Laverty said that the case had been closed as lenders could not give the loan needed, as the maximum loan was £853,000 due to the high LTV requirement and over four-and-a-half times income being needed.
Following the launch of Perenna, the broker tried the calculator, and the maximum loan available was £1,141,404, or around six times income.
The broker was able to recontact the client, and the application to offer time was 12 days.
In an illustration, Laverty showed that, due to stress testing, the maximum loan size could be limited with other lenders.
For a joint application with a gross income of £60,000, monthly credit commitment of £200 and one dependent, Perenna could offer a maximum loan size of £307,489.
This compares to a lender with a standard variable rate (SVR) of 7% plus 1% stress test who could offer £258,293, a lender with an SVR of 8% plus 1% stress test who could offer £235,546, and a lender with a 9% SVR plus 1% stress test who can go up to £215,966.
Perenna can offer ‘different’ and ‘fresh’ later life solutions
Laverty said that the “sad reality” for later life borrowers was they are “often frozen out and have to go to very specialist products, which are very expensive”.
He added: “We believe that these borrowers should have solutions.”
Laverty outlined an example with a 66-year-old borrower who has recently retired with an interest-only mortgage and had a lender SVR of around 9%.
The borrower had tried to remortgage previously, but did not meet the affordability or interest-only criteria, and her lender couldn’t offer a lower rate.
Monthly payments were around £890 per month, and while it was a struggle, they never missed a payment.
Their pension income came to £20,000 per year, including state and a small private pension. The mortgage balance was £120,000 with a property value of £250,000.
Perenna could offer interest-only and repayment mortgages as it did not have to stress test, and it calculated affordability “based on what it is today, not what it might be in the future”, Laverty said, and there is not a loan to income cap on like-for-like remortgage.
The lender also does not have a maximum age on its standard range, having offered loans to borrowers up to 78 years old.
“What this means for borrowers like this is they can get a lower rate than on a RIO, so we bring the interest rate down, but they also pay the capital back as well. So, for this borrower, it means she can save £350 per month, start paying the capital back and get in a much better situation,” he said.
Laverty continued: “We are proud to help clients like this. It is a massively under-served market and we can offer some very different, very fresh solutions.”
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