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Intermediary response

Martin Selby, general manager at Solent Mortgage Services, doesn&#39t normally give out advice,

but makes an exception here, recommending a discounted product

As a packager we do not give consumer advice or recommend any particular product and as

such we would advise any borrower to get good independent advice from a mortgage

intermediary.

For this particular case scenario, we have sourced a product from our own product range but

any broker and customer should fully research the market to ensure that they find the most

suitable deal that is available.

I believe that there are a number of factors in this mortgage case that narrow down Mrs

Roberts&#39 options when it comes to obtaining a suitable deal. The first issue is that Mrs

Roberts has an impaired credit record.

Because she has a CCJ still registered, she would not be able to obtain a prime mortgage. If

she had simply missed a few payments on her previous mortgage a few years ago and then

cleared them, she may have stood a greater chance of obtaining a mortgage through this

channel.

However, she does still have options with a non-conforming lender, of which there are many

to choose from. The second issue she would face would be her current income. If we take

her salary alone, Mrs Roberts does not have enough to borrow the amount she wishes

(£55,000) on the traditional income multiples.

Her salary of £14,000, even at 3.5 x income, would only generate £49,000. This

is obviously not enough to meet her requirements. However, if we also take into

consideration the maintenance payment she receives from her ex-husband then this brings

her total earnings to around £17,000. In most cases this would be more than adequate

to cover the loan. However, it should also be noted that most lenders will not consider this

as income in the usual way. But, if the maintenance payments are by court order, Mrs

Roberts may be able to claim this as income and apply in a traditional way for a mortgage.

Also, though we cannot assume this is the case, it might be advisable for Mrs Roberts to

obtain a mortgage that reflects her true income by the self-certification route. The reason

for doing this would be that it would enable her to include these payments towards her total

income.

Another important point to mention regarding the maintenance payments is the age of her

children. If the children are older, then the maintenance payments will run for a shorter time.

Mrs Roberts will need to be confident that she can continue with the mortgage repayments

after the maintenance payments have ceased.

With her earnings at around £17,000 and a deposit of £10,000, Mrs Roberts&#39

mortgage will be just under 85% LTV. From our product range I would therefore recommend

the Solent Homeloans discount mortgage.

Mrs Roberts would pay 5.95% SVR+ 2.05% with a discount from this total of 1.25% until

August 1 2003. After that this discount would revert to 0.5% to August 1 2004.

Mrs Roberts would pay redemption penalties of 8% of the outstanding capital balance in the

first two years of the mortgage and would pay one month&#39s interest or give one month&#39s

notice thereafter. However, in doing so, Mrs Roberts will be able to attain the home that she

desires.

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