Winston has a remaining balance on his mortgage of £60,000. 18 months ago he started his own business, but it went bankrupt (discharged seven months ago). He incurred a £10,000 CCJ, and missed three mortgage payments. He is now in full-time employment earning £65,000 a year. He wants to move and is looking for a mortgage representing £280,000 on a capital and interest basis at 70 per cent loan-to-value. What are his options?


Sarah Arfaoui is product development manager at Preferred Mortgages

“Based on the information that has been provided about Winston, we would consider offering him a product from our mid-adverse range.

One of the products from the mid-adverse product range that would closely match his needs is our one-year fixed full status mortgage product. This is currently offered at an interest rate of 8.69 per cent. The product has no extended tie-in, which means that Winston would not be committed to staying with the product for longer then necessary.

Provided Winston maintains his full and consecutive monthly payments on all borrowing in accordance with the arrangements for credit with us or any other creditors or lenders, he will be able to improve his credit profile over a 12-month period, and potentially may wish to remortgage to an appropriate prime mortgage product at this time.”

Alan Lakey is a partner at Highclere Financial Services

“Winston’s previous adverse history will clearly impact on his choice of lenders. His options have also been reduced by the volatility and scuffling within the non-conforming sector. The combination of bankruptcy, CCJ and arrears places this case in the medium to heavy adverse category.

We are not told when the CCJ was dated or whether it has been satisfied. Assuming it has not been satisfied, First National has a 7.04 per cent three-year fixed rate available via selected outlets. The application fee is a reasonable £899 and First National accepts the CCJ, arrears and previous bankruptcy as long as only one payment has been missed within the last three months.

Its debt-to-income ratio affordability calculation confirms that the loan size is acceptable and Winston may favour a fixed rate to ensure the loan remains affordable. If not, Salt offers a LIBOR-linked rate of 7.01 per cent which also accepts the adverse.”

David Hollingworth is head of communications at London & Country

“Winston has suffered quite severe credit difficulties following the collapse of his business and all in a very short space of time. It’s an unusual situation to have launched a business, suffered bankruptcy and reached the point of being discharged in such a short time.

The first thing for Winston to consider would be whether he has got back on a even keel after such upheaval. We don’t know if the CCJ and arrears have now been cleared but it would be wise to concentrate on eroding this before taking on a larger loan. It could be worth waiting six months to gain some stability and could also open up cheaper options.

There are lenders that can look at Winston’s case now. Timings and status of the CCJ will be important, but in any case Winston will likely fall into the medium to heavy adverse bracket.”


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