Mike Waite, director of MortgageQuest, says the problems being faced in this case should not cause any serious delay in finding a decent mortgage Having a utility bill CCJ should not be a major hurdle to securing a half-decent rate. It should not be that large a bill and is surely not as serious as an unpaid bank loan, for example. However, lenders will lump the applicants into defined brackets. For example, a CCJ for £400 could also mean he is allowed to be a discharged bankrupt with an IVA and mortgage arrears. This can be good for a client with problems like this, but I would rather go to a lender sympathetic to my client's 'small' problem.
The first question we need to know is, are the CCJs paid up – which they obviously are not in this case. This can make a significant difference to the products available. It does not help simply that they should have been registered some time ago. Secondly, the amount of the CCJs need to be determined, but it should be safe to assume they do not run into the thousands (I will assume up to £500).
He seems only to have had CCJs during his student days, so it would be safe to assume he has had no problems since going into full-time employment. However, it should be recommended that the client get his credit file from a credit reference agency to confirm his problems, and if he has not realised he has a CCJ or two or three, what else could be there in his past?
His income situation is great as the income multiple he needs is under 2.5 x. Also, having a good deposit of 15% helps in this case as he has a good income and adverse credit schemes will allow him to borrow beyond this if needed.
Being a first-time buyer does also make a difference as lenders can be fairly flexible where only CCJs are involved. For example, Amber Home Loans would ignore CCJs in certain circumstances but not for first-time buyers. The same goes for Abbey National who will not entertain unpaid CCJs for FTBs.
So far as schemes are concerned, I like the look of three lenders who can all help out here. First National Mortgage Company has a penalty-free tracker rate of 5.24% and will change its rate within three days of a base-rate change. This may suit our client very well as there are no penalties for overpayments, it will give him a very decent rate for the term of his mortgage if needed and give him time to pay his CCJs and get back onto a standard high-street rate. The usual drawback with this is MIG, which kicks in over 75%, but this product offers free indemnity and other flexible features that should suit the client nicely.
Birmingham Midshires Solutions also offers a good choice of rates. It offers a 12-month discount (5.15% pay rate) rising to its variable rate of 5.95% (with a three-year tie-in total). It will also not charge MIG in this case but is not competitive with FNMC over the longer term and will also tie him in for three years. Being a first-time buyer in a rapidly changing IT industry, I would recommend the flexible option to give him maximum choice for the future.