I have to be honest and admit that I too am confused about fast-track. My view has been coloured by the many conversations I have had with brokers on the topic.
What is obvious is that if there is any confusion or lack of clarity, some borrowers will be getting poor advice.
Fast-track is a by-product of mainstream lenders’ underwriting policies whereby if a borrower meets certain status criteria and the loan is considered low LTV a lender may decide not to ask for proof of income.
Typically, such a borrower will have a high credit score and the loan will be below 75% LTV.
This allows a lender to process cases more quickly for borrowers it believes pose less risk, thus speeding up the process and reducing the cost of processing.
Fast-track is not usually a documented policy of lenders as it is merely a convenient solution and depends on how a lender is coping with its business volumes.
The question for brokers and consequently for borrowers is, when should an application be fast-track and when should it be self-cert?
Let’s get the obvious out of the way first – fast it isn’t. Intermediaries can never know whether a lender will want proof of income.
Until a mortgage case is underwritten, nobody can know whether a borrower will have a high en-ough credit score to qualify.
At this stage, footprints have been left on a borrower’s credit file and if income is not provable the broker will have to put the deal to a lender that specialises in self-cert.
On top of this, lenders reserve the right to ask for verification at any point – often at an audit on post-offer cases. This process is so uncertain that it hardly makes brokers look professional to their clients.
Many brokers are being encouraged by lenders into the trap of putting borrowers on fast-track deals when income cannot be proved. They give it a go hoping the lender won’t ask for verification of income.
Brokers think they are doing borrowers a favour by trying to get them the cheapest deals but in fact they could be storing up trouble.
Lenders can pick the deals they want to fast-track and because they have never given brokers any assurances they can get away with ambiguity.
What happens when a borrower approaches a lender for a further advance? The lender then sees that the income is different from the original application – in other words, some of the income is overtime or bonus of which they can only accept 50%. I can assure you this scenario happens on a regular basis.
Sourcing systems are equally confused. Sourcing for self-cert deals brings up lenders such as Northern Rock and Standard Life neither of which, unless I am mistaken, are in the self-cert market.
It’s about time lenders that practice this policy told the market what they are up to – or at least gave us a clue.
If you are still confused, stick to the certainty of a self-cert mortgage. It does what it says on the tin.