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Specialist subjects

Only a few days in to the new year and we are seeing a huge demand for specialist lending. This can be a mix of options from prime with the requirement to think outside the box or near-prime where the customer is or has incurred some sort of adverse on their credit file.

Both areas appear to fit under the specialist lending terminology, although, it scares me how many people actually believe the latter is harder to place, or even worse, they turn the business away.

Some customers simply do not fit the high-street tick-box credit-scoring systems and need help from specialists. These may be able to offer a manual review of an application and demand for this is increasing. They are not usually household names but these lenders have an appetite to lend and have no set criteria for the customer to meet.

Obviously, regulatory requirements ensure that the case is sound, fits affordability and so on. This could include a cross-collateral charge on another property, two years up-front mortgage payments deposited in an interest-bearing account, guarantors, charges on artefacts or other covenants that give the lender added security.

Criteria can also be flexible, depending on the overall case. Lending in retirement (not equity release)/interest-only, more than two on applications, lending to trusts, the list goes on. But remember, having no specific guidelines to adhere to works both ways as the lender will price each case individually on risk. It is not a high-street case, so may not achieve high-street rates.

This year is predicted to present an increase in those with financial issues. Recent creditaction statistics show:

  • 1,779 consumer county court judgments were issued every day during the third quarter of 2011 and the average judgment amount was £2,816.
  • Based on annual figures to the end of June 2011, Citizens Advice Bureaux in England and Wales were dealing with 8,910 new debt problems every working day.
  • 1,611 people reported they had become redundant every day during the three months to the end of September 2011

If the above figures continue in 2012, demand for the near-prime sector will continue to rise. We have already seen lenders in this sector confirm an appetite for increased volumes and will cater for most credit issues. Some allow a missed mortgage payment, most allow CCJs and defaults and LTVs currently achieve up to 85 per cent for the employed and self employed. First-time buyers can also achieve 80 per cent LTV, subject to their issues being slightly more historic. Gone are the days of the 2007 sub-prime lender boom but I do believe huge demand by those with financial issues, fitting a nearprime structure, will make lenders not already offering products in this sector sit up and take note.

Why anyone would turn away this type of business is beyond me. Don’t say no to a customer until you have reviewed all the specialist lending opportunities available.

Dale Jannels is managing director of All Types of Mortgages

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