SPECIALIST mortgage business The Mortgage Lender has signed off on its first loan weeks after moving into its new headquarters on Glasgow’s Waterloo Street.
The business, which was set up by former Mortgages plc chief executive Trevor Pothecary, focuses on lending to the near-prime segment of the market, with its first loan allowing two film producers with non-standard incomes to buy a home.
Alex Cameron, chief administrative officer and general counsel at The Mortgage Lender, said the business is responding to shifting employment patterns in the UK that have left large numbers of people “not serviced terribly well” by high street lenders.
“Since 2008 we’ve seen a huge shift in the way people are employed in the UK, with many more people being employed in the contractor market” he said.
“If you go to the high street as a contractor, consultant or self-employed person they are unable to understand how to underwrite that.
“People may come in with multiple sources of income – some earned income, some self-employed and some pension income – and we would lend to them but the high street doesn’t do that very well.
“They like to put standard incomes in a processing engine and come out with standard outcomes.”
Mr Cameron noted that The Mortgage Lender is not targeting the so-called sub-prime area of the market, which is characterised by punitive interest rates being charged to people who are at a high risk of defaulting.
“There’s a distinction here between sub-prime and near prime,” he said. “This is very different to the old world as there’s no such thing as sub-prime any more – the regulators and lenders have become much more strict.”
As is the case with high street lenders, customers of The Mortgage Lender must show that they have reliable sources of income to be able to meet their repayment obligations, with the lender charging interests rates varying from 1.98 per cent to 7.01 per cent depending on circumstance and loan to value ratios.
Unlike high street banks, which use the money deposited by savers to fund mortgages and loans for borrowers, The Mortgage Lender lends out capital that has been raised by fund manager 24 Asset Management.
The asset management house has provided £250 million of funding from its UK Mortgages fund, which is listed on the London Stock Exchange’s Specialist Fund Market, with the loans moving into the fund once they are complete.
While The Mortgage Lender offers loans across England, Wales and Scotland, it has based itself in Glasgow due to what Mr Cameron termed “a fantastic population of really good employees”.
The business currently employs around 40 people but is looking to increase that to 100 in the short term.
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