Wealth Check: £15k in the bank but no credit rating

Ajay Barak, 27, moved to Nottingham from Delhi in March 2005. His work permit is valid until November 2010, with permanent residency due to be granted in March 2009. He works as an executive development chef at a chain of French restaurants in the Midlands.

Fed up with throwing his money away on rent, Ajay would like to invest his savings in a property. He has £15,000 put by and no debts. But, with no proven credit history, he is having problems finding a lender.

We asked Nick Gardner of Chase De Vere Mortgage Management, Darren Littler of Savills Private Finance and Ray Boulger of John Charcol for advice.

Case notes

Ajay Barak, 27, executive chef

Personal: Ajay, a chef, moved to the UK from India last year. He earns £34,000, plus a bonus of £6,000.

Savings: £15,000 so far, He contributes £1,600 a month to his savings account. Ajay has three accounts with NatWest - a current account, a savings account and a non-taxable savings account.

Mortgage: Ajay wants to buy a property but, with almost no UK credit history, is finding it hard to get a loan.

THE EXPERTS' VERDICT

Gardner recognises that Ajay's residency issues would deter most lenders from offering him a mortgage. Most lenders insist that borrowers have lived in the country for at least two years. Although Ajay has a work permit until 2010 and should get residency in 2009, he will need to prove that his permanent residency is guaranteed.

However, there are a few lenders who would be happy to lend to Ajay, Littler says. Both Halifax and its online subsidiary Intelligent Finance (IF) would consider Ajay's position, provided he has a minimum of two and a half years left on his visa.

Although both lenders are part of the HBOS group, they offer different products and assess applications in different ways. The case would need to be assessed on the basis of Ajay's credit score and would then be looked at by an underwriter.

Ajay's credit rating may well suffer from the fact that his previous job, as a head chef, came with live-in accommodation. As a result, he has less evidence to show that he can cope with mortgage or rental payments.

Neither lender publishes the maximum income multiple that they will consider, but typically it is possible to borrow four times your income from Halifax and up to five times from IF. Ajay's bonus may be taken into account, but he would have to provide details of his contract and evidence of when his bonus is paid.

Both banks offer an array of competitive fixed and tracker rates. Halifax has a two-year tracker costing 0.04 per cent over the Bank of England's base rate - it would currently cost 4.54 per cent. There is also a good-value two-year fixed rate costing 4.59 per cent.

IF will potentially lend more but is likely to insist that Ajay borrows no more than 90 per cent of the purchase price of a property, so he will require a sizeable deposit. Rates are slightly higher than at Halifax, but IF has flexible underwriting and experience of applicants who haven't lived in the UK for long.

Accord Mortgages will also consider people who have been in the UK for only a short time, Gardner adds, but only if the applicant is one of an approved list of professionals, such as a doctor or a dentist. Otherwise, they must have been in the country for two years.

Bank of Scotland would not be so worried about the length of time Ajay has lived here, or even his lack of credit history, but would need to see something that guaranteed his permanent residency in the UK. If he were able to show that he will definitely be granted citizenship in 2009, it would be able to lend him the money if he passed the usual affordability checks.

Cheltenham & Gloucester would also consider Ajay for a loan. His residency issues probably wouldn't cause any trouble, but his case would need to be considered on an individual basis by the bank's underwriters, who would take a view on his circumstances.

It would be helpful for Ajay to use an independent mortgage broker to investigate these avenues for him and negotiate on his behalf. Brokers can often persuade lenders to take a slightly more common-sense view and look beyond their usual lending criteria.

Boulger says Ajay needs to work out how to present his case in the best possible way. There are problems with his situation, but, on the plus side, Ajay is clearly in a good job, earning a good salary for his age. The fact that his work permit is valid until 2010 is helpful, as he already has guaranteed residency for at least three and a half years.

If Ajay is a graduate, that opens up a few other options, Boulger adds. Some lenders - Scottish Widows, for example - take a more favourable view of graduates, even if they come from another country. Ajay has savings, and is continuing to save, which will also work to his advantage.

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

    £50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Ashdown Group: Training Programme Manager - City, London

    £40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

    Day In a Page

    Timeless drama of Championship race in league of its own - Michael Calvin

    Michael Calvin's Last Word

    Timeless drama of Championship race in league of its own
    Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

    The secret CIA Starbucks

    The coffee shop is deep inside the agency's forested Virginia compound
    Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

    How the Establishment closed ranks over fallout from Nessie 'sighting'

    The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
    One million Britons using food banks, according to Trussell Trust

    One million Britons using food banks

    Huge surge in number of families dependent on emergency food aid
    Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

    2,500 years of history in 3,000 amazing objects

    Excavation at Italian cafe to fix rising damp unearths trove
    The Hubble Space Telescope's amazing journey, 25 years on

    The Hubble Space Telescope's amazing journey 25 years on

    The space telescope was seen as a costly flop on its first release
    Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

    Did Lord Ashcroft quit the House of Lords to become a non-dom?

    A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
    Apple's ethnic emojis are being used to make racist comments on social media

    Ethnic emojis used in racist comments

    They were intended to promote harmony, but have achieved the opposite
    Sir Kenneth Branagh interview: 'My bones are in the theatre'

    Sir Kenneth Branagh: 'My bones are in the theatre'

    The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
    The sloth is now the face (and furry body) of three big advertising campaigns

    The sloth is the face of three ad campaigns

    Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
    How to run a restaurant: As two newbies discovered, there's more to it than good food

    How to run a restaurant

    As two newbies discovered, there's more to it than good food
    Record Store Day: Remembering an era when buying and selling discs were labours of love

    Record Store Day: The vinyl countdown

    For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
    Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

    Mary J Blige and Will.i.am to give free concert

    The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
    10 best tote bags

    Accessorise with a stylish shopper this spring: 10 best tote bags

    We find carriers with room for all your essentials (and a bit more)
    Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

    Paul Scholes column

    I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England