A new lender, Magellan Homeloans, has launched into the mortgage market aimed at borrowers with an adverse credit record.
Providing borrowers can explain and document the reasons for their financial difficulties and can demonstrate they have had a clean credit history for the last 12 months, Magellan says it will consider their application.
Magellan managing director Matt Gilmour says: “Our philosophy is we understand people hit difficult patches which can lead to financial problems.
“What is important to us is the applicant’s ability to explain their difficulties and demonstrate how they have been able to restore financial stability so they can now afford a mortgage.
“In our opinion, a short-term financial wobble should not preclude borrowers from mortgage finance on a long-term basis.”
The lender has launched with a choice of five mortgages between 65 per cent and 75 per cent loan-to-value, all with varying levels of allowable adverse credit criteria. However, all of the products are priced at Libor plus 8 per cent.
Application fees are on a sliding scale and vary with the price of the property. The completion fee is 1.5 per cent, with a minimum of £995. There are no early repayments charges.
They are available for purchase and remortgage in England and Wales for customers taking out loans of up to £400,000. Borrowers must have a minimum income of £25,000.
The range is also open to self-employed borrowers and first-time buyers.
Magellan is initially piloting its service via a panel of networks including Sesame, Intrinsic, IN Partnership, Pink Home Loans, First Complete, Homeloan Partnership, Mortgage Advice Bureau and The Whitechurch Network.
Gilmour is former head of UK residential mortgage securitisation at Fitch Ratings, where he founded the firm’s European mortgage servicer rating programme.
He is also co-founder and chief executive of Infinity Mortgages and co-founder and former chief executive of Unity Homeloans, both non-conforming UK residential mortgage lenders.
Magellan’s sales director, Clive Wilson, was formerly the sales and marketing director of Beacon Homeloans. Prior to this he was head of sales at Future Mortgages.
Lentune Mortgage Consultancy director Stuart Gregory says: “I would weigh up the circumstances because it would be dictated by how urgent the customer wanted to move. At this rate it wouldn’t be my first port of call. I would probably first go to some of the smaller building societies.
“Also, how many people who have had blips will have the means to raise a 25 per cent deposit? There are already people like Kensigton and Precise who will ignore blips over two years ago so it is a case of weighing things up.”