skip to main content

Case Study 2 – Shared Ownership - Impaired Credit – The merits of using a Mortgage Adviser

Client/Proposal

Our clients were partners in their early 30’s. She works in the fast food industry and is currently earning between £200-£300pw but has scope to increase her hours to circa £550pw and has been employed for 6 years. He has currently been self-employed for approximately 1 month and has a Ltd Company for the purpose of accepting agency work as a HGV driver. Previously he was in a different role. His income is sporadic and has no history to it as newly formed. They have 2 children, and currently rent via the Housing Association but have an opportunity for ownership under a Shared Ownership scheme.

They have a gifted deposit available to them from parents of £15k and have been offered an initial share at £87,500 with an overall value of the property placed at £240k/£250k.

The obvious problem to note is income. She needs to enhance her hours as soon as possible to show regularity and her partner may need to find permanent employment. CCJ for £720 (Utility bill) Oct 2015 not satisfied, a couple of recent defaults and small loans which will require paying off prior to completion.

Outcome

There is no outcome to this case as in its current format it is not placeable. However, this is one of those cases that a client needs to work towards and so having conducted the research and spoken to a couple of lenders, it was possible to gauge what good might work for their proposal to be progressed.

Accordingly, the message that we gave to this client was:

  • CCJ’s are acceptable to this lender providing there has only been 2 in total within the last 2yrs amounting to not more than £1,000 and none within the last 6 months. Given that you believed yours to be £720 and registered in October 2015, then for an application to this lender it will be disregarded as it is beyond 2yrs old.
  • For Defaults, there should be no more than £1,000 in total within the last 2yrs and they must be satisfied or up to date prior to completion. Also, there needs to be zero defaults within the 3 months prior to application. Accordingly, if you can confirm that the defaults do not total more than £1,000 in the last 2yrs and that they will be up to date for at least 3 months prior to application and satisfied, then you will be fine.
  • Their maximum lending is up to 90% share of the share being purchased and so as they felt they would be looking for lending at circa £72k against a purchase shared price of £87,500, this equates to 82.28% which means that they may, subject to affordability be able to lend up to £78,750 against that purchase price. They will only allow up to 60% maximum of the overall market price and so this seems to fit also.

Just because a case is not workable initially, CDMB is able to give the relevant advice so that clients can better understand their position and work towards a plan to bring about a satisfactory conclusion.

Book a consultation

Get in touch