The Mortgage Credit Directive brought with it several changes for mortgage advisers: second charges came under the supervision of the Financial Conduct Authority, the ESIS was enforced and foreign currency mortgages suddenly all but disappeared.
But just because the regulation put a lid on the number of products available to borrowers paid in foreign currencies, doesn’t mean the volume of demand also dropped.
Brokers will know that the type of borrower paid in foreign currency is also more likely to be wealthy and have a complex income structure aside from the denomination of their salary or bonus.
Vantage Finance recently completed a case where a self-employed borrower wanted to borrow £150,000 to pay for a new extension on his home. The deal was fully regulated, reducing his funding options but to make matters more complicated he also received his salary in US dollars into a UK bank account.
Following MCD, his options were even more minimal. Vantage however agreed a second charge loan with a lender which agreed to the terms under its high net worth waiver. The product offered was a two year second charge loan with retained monthly repayments. This helped the client further as it meant they had no extra monthly outgoings and could then look to remortgage their 1st and 2nd charge in 2 years’ time. This would tie in with the expiry of their current fixed rate with Santander ending.
Lucy Hodge, managing director of Vantage Finance, said: “This type of deal used to be relatively straightforward but unintended consequences of mortgage regulation have put borrowers at an unfair disadvantage.
These borrowers are typically pretty financially astute as well so it can be doubly frustrating for them to be turned down and find their broker can’t place the deal. Having a specialist partner to broke the deal with a more specialist panel of lenders can be a saving grace in this situation.”
Loan amount: £150,000
Term: 24 months with no monthly repayments