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Lender response

Peter Beaumont, sales and marketing director at Mortgages PLC, says that Mrs Roberts needs

expert advice but there should be a sub-prime product out there for her

Unfortunately, Mrs Roberts is not in an uncommon situation. At Mortgages PLC, we are seeing

more and more people that are finding themselves in financial difficulties as the result of a

divorce or a marriage breakdown.

Divorce itself can be an extremely stressful time for all of those concerned. And often,

otherwise normal day-to-day payments – whether bank loans, credit card bills, utility bills and

even mortgage payments – can be the last thing on someone&#39s mind. Unfortunately these

issues turn into purely trivial matters when compared with the problems that they will face in

their day-to-day lives. Indeed, it&#39s fairly common to find that this type of client is more

concerned about where they are going to live. Or they might be going through a horrendous

custody battle with their former partner and could be worried about their child&#39s welfare. The

key thing in this particular case is the maintenance payment. Most lenders would require

some form of written proof of the extra income and the underwriting decision could be

influenced by the age of the child – for example: if they are coming up to 16 then the extra

payments might be about to stop and this could impact affordability.

What are the important points of Mrs Roberts&#39 case then? She requires £55,000 to

purchase the £65,000 property which makes a loan-to-value of 84.6%. If she chooses

to disregard the maintenance payment as income then she could obtain a loan on 4 x income

multiples but this does restrict the choice of lender. If the maintenance payments are

included, she has another 3K of income per annum which brings the income multiples down to

3.24%.

There are a number of other assumptions we must make. The first is that the CCJ is

registered in her name and not jointly with her ex-husband. The case study does not state if

the CCJ was incurred or satisfied six months ago. If it was, then she has a range of options,

as numerous lenders now offer products catering for this. However, if the CCJ is outstanding

then Mrs Roberts would definitely require a sub-prime mortgage.

It is in Mrs Roberts&#39 best interests to see a broker and that this broker source the deal via a

packager who has an intricate knowledge of the sub-prime market and could find lenders who

can accommodate the deal. If Mrs Roberts tries to research the market by herself, she could

end up with a lengthy search for a mortgage which is probably the last thing she wants in her

current situation.

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