Whether it be satisfying the whims of a nervous underwriter or acting as a counsellor for a bereaved client forced into raising finance, there aren’t many situations a mortgage broker hasn’t faced to get their client the right deal.
This week our panel of intermediaries share the circumstances of the most difficult case they have been asked to place over the last six months, what obstacles stood in their way and how they overcame them.
Ross Murphy, senior mortgage and insurance adviser at Capricorn Financial Consultancy, takes on additional mortgages, child maintenance and a limited history of earnings to get his client a mortgage.
Simon Chalk, technical manager – equity release, Age Partnership, shares his experience meeting a 75-year-old widow struggling to maintain a decent quality of life despite being asset rich.
John Yerou, managing director of specialist broker Freelancer Financials, tackles complex income streams and age restrictions from his client who had already been turned away from his own high street bank and private banks.
Ross Murphy is senior mortgage and insurance adviser at Capricorn Financial Consultancy
My client is a partner within a law firm, earning £200,000 a year, looking to borrow four times income.
At first glance this case looks straightforward but after taking a closer look under the hood a combination of; child maintenance payments, background residential mortgages, self-employed tax structures and a limited track record of earnings turned this application into a real headache.
Affordability was a real challenge due to the ongoing child maintenance payments and the bizarre treatment of the background residential mortgage. Even though my client’s background residential mortgage was set up on an interest-only basis – and he had savings which completely offset the mortgage balance – the majority of lenders were ‘stress-testing’ the loan based on a capital repayment structure with a notional rate of interest approaching 6%.
With between £2,000 a month of child maintenance and £2,088 a month perceived payment for the background mortgage, a large proportion of my clients disposable income was already spoken for.
The next hurdle was identifying a lender which would accept drawings despite my client only joining his current firm in the past 12 months. A number of lenders were initially positive towards the self-employed structure but wanted SA302s/P60s which demonstrated a similar level of income over the past two to three years. However, my client’s previous firm had gone into administration which proved to be another complication.
After a few false starts with lenders that supposedly cater to ‘professionals’ it landed with Metro Bank. Their underwriting team were willing to consider current levels of income confirmed in writing by the senior finance partner and it only considers the actual monthly payment for background residential mortgage rather than stressing at a ludicrous level.
Simon Chalk is technical manager – equity release, Age Partnership
While many clients willingly embrace the notion of enjoying their property wealth, others do not. The ‘reluctant borrower’ is in my experience, the most difficult one to work for, particularly a widow or widower who feels that they are letting down their children and deceased spouse. Often we will hear that he/she would never have done this.
Overcoming this outdated and illogical view takes patience, understanding and tact. No qualification can prepare you for this – only experience and a genuine compassion for others will.
When you are sitting there with a client that you absolutely know would enjoy a much happier life by relieving their money worries, yet the signals are all cold, it stirs you on to perform at your very best.
And so it was with a recent case of mine, where an anguished 75-year-old widow only agreed to being advised when pushed by her caring niece. Her home looked dated and tired, her car falling to bits, and evidently little had changed in over a decade since her husband had passed away.
Two long meetings later and a plan was put in place. I visited her a month later with a bouquet of flowers for her and her niece. A nearly-new car was on the drive, her kitchen and internal doors had been ordered, and she was looking into a Scandinavian cruise with her niece.
The lady’s smile was most telling and to hear her say that she was happy and relieved to have released equity, was my gratification.
John Yerou is managing director of specialist broker Freelancer Financials
The most complicated case we had to deal with recently was a self-employed client with multiple income streams. He was downsizing but wanted a mortgage so that he could also assist his children to get onto the property ladder.
One source of income was through a mixed group partnership LLP which he recently changed to a limited company following his accountant’s advice. The income from the limited company was rental income through a commercial lease which expired in 20 years. The other source of income was rental income from commercial properties owned personally with his wife. Not only were his financial affairs complicated, he was 64-years-old and wanted a mortgage on an interest-only basis.
He initially went to his own bank, but lost patience after they couldn’t understand his financial affairs. He even went to a private bank via another broker that struggled to give him what he needed.
When he came to us, we could see that he could afford the mortgage, but the challenge we faced was communicating that to high street lenders as we typically avoid the private banking route. We approached a number of banks but eventually placed him with Clydesdale who were able to see the wood through the trees and quickly understood the strength of the case.
