Mortgage Origination Case StudiesThe case studies below are actual mortgage applications successfully processed to completion, they are intended for the purpose of providing an example only, and every mortgage application is underwritten separately on its own merits.
Case Study 1) - Unable to prove affordability
The Problems An employed applicant who wanted to borrow $120,000 on a property valued at $143,000 (85% Loan to Value). The applicant had a full time job paying $20,000 (gross income), but had income from another job paying $13,500 with additional income from shares of $6,500 The income from the part time job was paid in cash and no wage slips were available to prove this income.
Status The applicant was also a first time buyer having no track record of mortgage payments, however he did have a clean credit file. Recently divorced and paying maintenance he could afford the mortgage but was unable to prove it, the maintenance payments would stop in years time and house prices were on the up, so he wished to purchase a property as soon as possible.
Solution To successfully originate the mortgage with good terms allowing the applicant to swap lenders in 12 months time when his position improved without penalties. We recommended a self certification employed mortgage allowing him to declare his own income from his employment's, no proof of income was required at all. The rate at the time was 5.28% for 15 months, which represented a discount of 2.5% for 15 months from the lenders standard variable rate. There were no tie-ins after this period, so after the 15 months we could offer a more competitive product when his situation changed.
Case Study 2) - Credit Dings and Defaults
The Problems The applicants had become recently married, having both been through difficult and complicated divorce procedures. The male applicant had incurred 4 Defaults with a value of over $2,500 and a County Court Judgment totaling $7,200. They were looking to purchase a property at $250,000 with the loan required of $212,000. (85% Loan to Value)
Status Both applicants were self employed, no accounts would be available to support the application due to them both only trading less than a year.
The Solution The Michael Group was able to offer a scheme that enabled them to purchase the property. The scheme we recommended allowed for unlimited Coca's/Defaults and also Unlimited mortgage arrears. This scheme also allowed a speedy offer as the only application requirements were an Application form together with the valuation cost. The rate applied to this scheme was 10.25% variable and the redemption period was for 3 years, there would also be a opportunity to refinance to a more competitive rate after a two year period providing the new mortgage was conducted satisfactory.
Case Study 3) - Bankruptcy
The Problems We were approached by an applicant who was made bankrupt several years ago. His business folded which incurred credit dings and Defaults as well totaling $3500. The applicant had discharged his bankruptcy, but the credit dings and Defaults remain unsatisfied. He was looking to purchase at $100,000 and required a $70,000 loan (70% Loan to Value). he also intended to rent his existing property out, as he thought it was a bad time to sell.
Status Now employed with a salary of $18,000 with no other credit commitments
The Solution The Michael Group was able to offer a rate of 6.75% Capped rate for just over a year, which had a three year redemption period. The mortgage allowed the applicant to retain his existing property in a buyers market, which he was confident would increase in value significantly over the next 3 years.
Case Study 4) - Self Certification with minor credit dings
The Problems The applicant had 2 credit dings from 3 years ago at the time he applied for the mortgage, both were registered for $350 and had been satisfied for a while. The main problem was that he was over committed on credit cards and loans paying over $500 per month plus his mortgage of $350 per month. He obviously wanted to reduce the payments but retain the ability to repay capital as quickly as possible without penalty. His house was worth $180,000 his mortgage was $51,000 and he had total debts of $14,500 on loans and credit cards
Status The Applicant was Self Employed for 1 year and business was looking very good for the next year, but because of the outstanding credit he had, it was creating a cash flow problem
The solution The Michael Group was able to offer a mortgage that allowed him to consolidate all his outstanding credit into his mortgage. The interest rate was 7.35% variable (less than he was paying currently), and the mortgage had no redemption fees or charges at any time. The new mortgage payment was $460 per month a saving of $390 per month. The other features of the mortgage was the flexibility options that allowed him to underpay or overpay his mortgage, have payment holidays, request a loan and have the money in 24 hours (loans charged at mortgage rates). |