Debt consolidation is an important tool to put clients in a stronger position – Adams

Debt consolidation is an important tool to put clients in a stronger position – Adams


What’s more, the same research uncovered that 40 per cent of adults who have experienced adverse credit in the last three years have more than £5,000 of outstanding unsecured debt.

The cost of interest payments on unsecured debt, such as personal loans and credit cards, can soon become significant – meaning that many customers get stuck in a cycle of simply servicing the debt without reducing the balance.

This is why remortgaging for debt consolidation may prove a sensible option for some and by raising extra capital to pay down their debts, customers can often significantly lower their monthly payments.

There are, of course, considerations in converting an unsecured debt to one that is secured on a customer’s home but, in the right circumstance a debt consolidation remortgage represents best advice for the client.

And with so many people having increased their debt burden over the past year, it’s likely that almost all brokers are going to work with customers where this is a consideration.


Underwriting conditions

Sourcing the right debt consolidation remortgage for your clients, however, may not be as straightforward as you first think.

The widespread restriction of lending at higher loan to values (LTVs) has been well-documented and has probably impacted some of your clients.

Often a debt consolidation remortgage will require a higher LTV to allow for the capital raising and even where lenders have returned to higher LTVs, many limit the LTV when remortgaging for debt consolidation.

Similarly, it is common for a lot of lenders to include a debt to income ratio as part of their affordability assessment.

This could limit a customer’s ability to borrow the amount they require to pay off the debt, simply because that debt is factored into their affordability calculation.

However, specialist lenders are often specialists in debt consolidation, which means they are able to remove these hurdles, while still making a full and robust affordability assessment.

Used correctly, debt consolidation is an important tool to help brokers put their customers in a stronger financial position – and the best options don’t always lie on the high street.

So, when you think about debt consolidation, think about taking a specialist approach.



Pepper Money: ‘What do specialist distributors offer? Expertise’

Pepper Money: ‘What do specialist distributors offer? Expertise’

In the fourth and final video in the series discussing Pepper Money’s adverse credit White Paper, Adams said the rarity of adverse credit cases make it harder for brokers to develop and retain their knowledge in this area.

“These cases do not cross brokers’ desks every day, so it’s harder for everybody to become an expert in all the things that they need to know when it comes to spotting customers with adverse credit,” he added.

“There are brokers who make a living – and a brilliant living at that – from being the expert. We have two on the panel today with Impact SF and Brightstar – they see these customers every day and they keep in touch with the lenders and the nuances that are changing and better than that, its the importance of the industry relationships,” he added.

Specialist distributors also have direct access into underwriting teams with the knowledge and information required to get a case through – and these cases often go through more quickly because they are better packaged, said Adams.

“These distributors have a huge role to play in the market, particularly with adverse credit, and I think that’s because they have the expertise that we all need.”

For more, click below to watch Mortgage Solutions TV [08:53].



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Watch the first video in the four-part series here:

Second video:

Third video:

Pepper Money cuts BTL rates

Pepper Money cuts BTL rates


On the Pepper 48 light range, the two-year fixed rate is now available at 3.15 per cent up to 65 per cent loan to value (LTV). Up to 70 per cent LTV, two-year fixed rates are available from 3.25 per cent.

On the Pepper 36 range, two-year fixed rates are available from 3.75 per cent up to 75 per cent LTV and five-year fixed rates up to 80 per cent LTV are available from 5.35 per cent.

Paul Adams (pictured), sales director at Pepper Money, said: “This is just the latest in an ongoing set of enhancements we have made to our product range.

“We provide a dedicated and accessible case owner on every application, we put brokers in control of when they want to instruct valuations, and we are delivering a speed of service which means we are currently within 24 hours at every stage of our process.”


Pepper Money on adverse: ‘We have to be nailed on sure and confident about affordability’

Pepper Money on adverse: ‘We have to be nailed on sure and confident about affordability’


In the third in our adverse credit video series supported by Pepper Money, Adams explained the science behind lending to one of the more complex segments of the market.

“We have to be nailed on sure and feel confident around affordability and that we are lending responsibly,” he said.

“What we try and do is ring-fence the issue or life event that’s there on the credit file, understand what happened, look at how long ago that was and make a decision. This is why Pepper made a decision not to worry about the level or number of County Court Judgments (CCJs). It doesn’t matter about the value or volume.

“We deal with a whole host of different types of customers with an array of income levels so a big default could be another man’s smaller default.”

He added that it does not matter whether it has been satisfied or not, simply how long ago it was, the recovery and current position.

Impact Specialist Finance managing director Dale Jannels went on to outline the kaleidoscope of lending approaches in the adverse credit market, including the fact Pepper does not credit score and that some lenders were asking borrowers to sign a disclaimer to say they would not take a payment holiday as soon as they move to the lender.

Rob Jupp rounded off the video with his thoughts on how the market has changed since the ‘pile them high, sell them cheap’ days of the 2006 or 2007 market.

“Let’s be clear. This is a fully-functioning, ethical, fair, priced-correctly, risked-correctly marketplace, which has plenty of opportunity for customers that have had adverse credit in the past or present,” said Jupp.


See the video in full below [08:45] and review the two previous videos in the links underneath.



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Watch the first video in the four-part series here:

Second video:


Pepper allows advisers to kick start valuations

Pepper allows advisers to kick start valuations


Pepper automatically instructs a valuation once it has assessed all of the decision-making documents, but the change means advisers can choose to instruct the valuation earlier to speed the progress of the case.

Advisers are free to use any of the valuers on the Legal & General panel which is used by Pepper.

“So, if a broker is confident their customer’s documents will be verified, they can get a head-start by instructing the valuation sooner,” the lender said.

Paul Adams, sales director at Pepper Money, said it was an important tool for brokers as it meant they could give their customers an advantage in a competitive market where time is of the essence.

“Why let your customer wait for a valuation when you are confident a case is going to proceed?” he said.

“We give brokers more control over the progress of their applications by instructing their own valuations as soon as the application has been reviewed, which means they no longer have to wait for all of the documents to be reviewed to get the ball rolling on the valuation.”


Brokers must be visible to 1m adverse credit borrowers ready to buy homes – Pepper Money video

Brokers must be visible to 1m adverse credit borrowers ready to buy homes –  Pepper Money video

According to Pepper Money’s adverse credit White Paper, of the 1.09m people who have experienced adverse credit in the last three years, t66 per cent will be approaching a broker for advice, up from 40 per cent a year ago.

In the second video debate focused on the research, Rob Jupp Brightstar’s CEO said the quality and in-depth nature of brokers’ online customer reviews have never been more critical.

“What your potential customers will be looking for is people who look like them. Normal people with similar issues to theirs. What I would really urge your [adverse] customers is not just to leave online reviews, but encourage clients to make them relevant. You’ll find that they will be refreshingly honest about their own situation. It’s almost a cathartic thing, they say this is me, this is what I had and this is what the broker did for me – and that will be tremendously encouraging to the million or so people looking to buy in the next 12 months,” said Jupp.

If they can see people who look like them, they are more likely to pick up the phone and say can you help me, said Jupp.

Dale Jannels, managing director of Impact Specialist Finance said education will be key for this market as a lot of adverse credit customers still don’t know they are in a position to buy a home.

“It’s down to all of us – advisers, packagers, lenders, networks and even trade bodies – should be out promoting to the end-consumer the fact it is an option to get a mortgage, no matter what your scenario,” said Jannels.

Of course it’ll depend on their affordability, credit history and score but they must come in to an adviser to explore all avenues,” he added.

Pepper Money sales director, Paul Adams said he was ‘chuffed to bits’ that interest in brokers’ services had risen from 40 to 66 per cent since the first survey was taken over 12 months ago and advocated a higher online presence promoting support for adverse credit customers as part of that skillset.

For more from all of our panelists watch part two of our debate [09:50] – and click on the link under the video to download the research.





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Watch the first video in the four-part series here:


Lender treatment of mortgage payment holidays still ‘pretty unknown’ – Jannels

Lender treatment of mortgage payment holidays still ‘pretty unknown’ – Jannels


Impact managing director Dale Jannels said some were being “naïve” in their treatment of payment deferrals given the current economic conditions.

Speaking on Mortgage Solutions Television in association with Pepper Money, Jannels explained the confusion around the subject.

“Mortgage payment holidays are still pretty unknown,” he said.

“Some lenders are taking it quite happily if you’ve taken a payment holiday for six months, whereas others are really looking at it on an adverse basis, which I think is still a little bit naïve in the current climate.

“And of course we’ve got the possibility of another six months of mortgage payment [deferrals] for those who didn’t take them before. So we’ve still got a long way to go.”




Pepper Money sales director Paul Adams and Brightstar CEO Rob Jupp were also taking part in the panel discussion which addressed the findings of Pepper’s latest adverse credit report.

The research revealed nearly half of people who have missed credit repayments as a result of Covid-19 did not have an agreed payment holiday in place – and three-quarters of those were concerned it would affect their ability to get a mortgage.

Around a third of people with adverse credit also confirmed they had missed more payments in the last six months.

And a greater proportion of people with adverse credit have seen a decrease in their income compared to everybody else and have increased the level of debt they have.

“We’ve learnt Covid-19 has not impacted everyone financially in the same way,” said Adams.

“It would seem though that the less equipped to cope financially are those experiencing the most difficulty. These people have been impacted in a greater way than across the whole national picture.

He added: “It’s important we do not let this group of potential customers become disenfranchised from the mortgage market.

“There’s so many intermediaries in the mortgage market place that can help these customers find solutions, to help them become homeowners.”


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Covid-underwriting has levelled playing field between specialist and mainstream lenders – Adams

Covid-underwriting has levelled playing field between specialist and mainstream lenders – Adams


Mainstream lenders have, on the whole, taken a lighter touch approach to underwriting, using automated data-driven processes to access large volumes of applications, whereas specialist lenders have been more hands-on with their underwriting, using technology to support and enhance a manual process.

Consequently, the expectation has been that a mortgage application to a mainstream lender will be processed more quickly than one submitted to a specialist lender.

Not anymore, however.


Forensic underwriting

The problem with automated data-driven processes is that they require a track record of consistent information in order to make a decision.

They are less effective at assessing an application from a customer who has recently experienced a significant amount of change.

So, in the current environment where everyone’s lives and most people’s finances have been impacted by Covid-19, the large mainstream lenders are having to take a more forensic approach to ensure they continue to make robust decisions, accounting for any recent changes to a customer’s circumstances, particularly when it comes to lending to the self-employed.

This means changing processes and resource models that have been built to support light-touch underwriting, in order to accommodate large numbers of applications that now need a hands-on approach.


Turnaround times equivalent

Specialist lenders have built their entire operational model on the individual assessment of every application and recruited the expertise specifically to do so.

The result is that the perceived difference in turnaround times between mainstream lenders and specialist lenders no longer exists.

All lenders now need to take the time to understand the individual situation of a customer applying for a mortgage.

So all lenders are on a level playing field and as a consequence many mainstream lenders are currently working to significant backlogs, whereas some specialist lenders which are used to this way of working are up-to-date across their application processing.

For brokers who have not worked with specialist lenders in the past, because they have worried about the impact of individual underwriting on timescales, there has never been a better time to work with a specialist.

When it comes to choosing which lender you will recommend, take a look online at the published service levels to see which type of lender might provide your client with the better experience.




Hands-on underwriting requires proactive and honest communication from lenders – Adams

Hands-on underwriting requires proactive and honest communication from lenders – Adams


The property market has been given a shot of adrenaline by the limited period stamp duty holiday and mortgage applications have skyrocketed, with many brokers saying they have never been busier.

At the same time, lenders are addressing every application with more scrutiny, which means the process is taking longer and the system is becoming clogged up.

So, why are lenders taking longer to review each case and what can brokers and lenders do to improve the situation?


Big shift for lenders

The first thing to consider is that complex is the new normal.

With so many millions of people being furloughed or taking payment holidays on their mortgage and other credit commitments, cases that were previously straight forward, now have different levels of considerations.

This is before you consider the self-employed, contract workers or people who previously had a record of adverse credit.

So, a more hands-on approach to underwriting and assessing the affordability of each case individually is now commonplace.

And this is a big shift for mainstream lenders.

In an article in Mortgage Solutions on the frustrations being experienced by brokers, Payam Azadi, director and partner at Niche Advice, said: “Historically lenders were confident by the aid of technology, but now more and more cases have to be individually underwritten.

“That’s not a problem for specialist lenders but it is for a volume lender. All of a sudden, they have to put a series of manual processes in.”


Communication is critical

It’s fair to say that the requirement to take a more rigorous approach to underwriting isn’t just reserved for mainstream lenders.

Any prudent lender in the current uncertain and unprecedented environment should be taking more steps in its underwriting process to ensure the mortgage will be sustainable and affordable.

However, specialist lenders have built their businesses on taking a hands-on approach to underwriting and so now that this is required on nearly every case, it’s specialist lenders that have the expertise in how to manage, not just the underwriting, but also the process.

A key part of the process is communication.

Specialist lenders often require more documentation to support an application than a broker might expect from a mainstream lender, and so we have worked hard to evolve our processes to ensure we ask for everything upfront and communicate openly with a broker about how these documents are being used and why we need them.

There are also often more contact points along the way working more closely with the broker.

The reality of the current situation is that cases are sometimes taking longer to process and that can be frustrating.

Clear communication and honest dialogue are the two things that can help reduce this frustration and, in the specialist market, these are qualities that have been important to all lenders in recent years as we have identified ways to best support our hands-on approach to underwriting.

Now that hands-on underwriting is becoming more common, so too should proactive communication and honest dialogue.



Pepper removes CCJ and defaults caps while trimming BTL rates

Pepper removes CCJ and defaults caps while trimming BTL rates


The lender has lifted restrictions on county court judgements and defaults meaning there is no cap on either volume or value for these.

It is also able to consider unsecured missed payments within the last twelve.

Rates have been cut on its buy-to-let limited company range with its lowest starting from 3.25 per cent.

And the lender has re-introduced its flat fee structure.

Pepper Money sales director Paul Adams (pictured) said the lender would be introducing more changes over the coming weeks and months.

“This latest enhancement means that we can take a more flexible approach to lending for customers who have recent incidents of adverse credit,” he said.

“We are proud to be able to offer a solution to a growing number of customers who do not fit the restrictive mould of the high street credit scoring model.”


Primis panel

Pepper has also been added to the Primis lending panel, allowing the network’s appointed representatives (ARs) access to its residential and buy-to-let mortgage ranges.

Primis mortgage network proposition director Vikki Jefferies said increasing the specialist proposition would be a key focus over the coming months.

“The property market is buoyant at the moment and more customers are finding that their needs are best met by a specialist lender that is able to take a pragmatic approach to recent changes in their circumstances,” she said.

“Welcoming Pepper Money onto the panel will be greatly welcomed by our members and we are confident that it will ensure more of our AR firms can continue supporting their specialist customers with the tailored lending solutions they require.”