Hints & Tips from Christine Newell

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Useful tips I have learnt this week

Change of status from Sole trader to Ltd Company normally most lenders will require at least 1yrs trading for the new Ltd Company business however Kensington can work off the sole trader accounts. 
Always round down any income that you input into the Woolwich application system.  Woolwich use HMRC to verify income and rounding it down means that they will not ask for income confirmation proof if the inputted income is less than what HMRC hold on their records.  The case can then proceed to offer must quicker
Nationwide offer Forces Help to Buy.  This is where a client who works for one of our armed forces can get an interest free loan of up to 50% of their salary (limited to £25K maximum).  This is paid back over 10yrs through their monthly salary.  Other lenders who also consider this are Platform, Precise, Coventry, NatWest, Woolwich, Kent Reliance (available via Brightstar) and Kensington.
By switching clients from 2nd applicant to 1st applicant can allow greater borrowing.  An example of this was an application with two clients.  The first applicant was employed but not much credit, the second applicant was self-employed with just a credit card. The system offered an amount at 90% but clients required 95%.  By switching the self-employed client with more credit to the 1st applicant using their arrow buttons within the system gave them a system accept at 95%  
Self-employed contractors can be accepted using their contract daily rate x 5 x 46 weeks.  In general they need to have 1yr contracting on a self-employed basis but Kensington can also look at clients that have a history of working in the same type of employment and have not got at least 1yr contracting.

Underwriting Changes

NatWest have introduced interest only.  A client needs a minimum sole income of £100,000 to qualify.  Up to 75%LTV available but if using sale of mortgaged property then this is limited to 50% and the property needs £200K of equity remaining.  You can top up to 75% on repayment if using this strategy so part/part allowed.  Other strategies include cash in savings, ISA, Endowment, Pension.  NB. You cannot capital raise for debt consolidation on an interest only basis.
Interest only now allow up to 75%LTV with a minimum sole income of £75,000 up to £2M borrowing.  Interest only allowed up to 50%LTV with no minimum income.  Part and Part also allowed.

Mortgage Credit Directive Hint and Tip

Start reviewing whether you are going to offer 2nd charge advice post 21st March 2016.  You do not have to do this and can still refer this business to a 3rd party or master broker however you will not be able to call yourself independent or use the word whole of market or unlimited product range in your disclosure to your clients if you choose to refer 2nd charge business.

Best regards,

Christine Newell
Mortgages Technical Director 
Paradigm Mortgage Services LLP

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