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.

PROMOTED VIDEO
Life and Style
life
Arts and Entertainment
Cold case: Aaron McCusker and Christopher Eccleston in ‘Fortitude’
tvReview: Sky Atlantic's ambitious new series Fortitude has begun with a feature-length special
Voices
Three people wearing masks depicting Ed Miliband, David Cameron and Nick Clegg
voicesPolitics is in the gutter – but there is an alternative, says Nigel Farage
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
News
i100
News
people
Sport
Chelsea manager Jose Mourinho
footballThe more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Life and Style
Vote green: Benoit Berenger at The Duke of Cambridge in London's Islington
food + drinkBanishes thoughts of soggy school dinners and turn over a new leaf
News
Joel Grey (left) poses next to a poster featuring his character in the film
peopleActor Joel Grey comes out at 82
News
i100
News
business
Finacial products from our partners
Property search
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

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Recruitment Genius: Technical Report Writer

    £25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

    MBDA UK Ltd: Indirect Procurement Category Manager

    Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

    Day In a Page

    Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

    Isis hostage crisis

    The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
    Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

    The runaway buccaneers and the ship full of gold

    Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Maverick artist Grayson Perry backs our campaign
    Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

    Assisted Dying Bill: 'I want control of my life'

    This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
    Move over, kale - cabbage is the new rising star

    Cabbage is king again

    Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
    11 best winter skin treats

    Give your moisturiser a helping hand: 11 best winter skin treats

    Get an extra boost of nourishment from one of these hard-working products
    Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

    Paul Scholes column

    The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
    Frank Warren column: No cigar, but pots of money: here come the Cubans

    Frank Warren's Ringside

    No cigar, but pots of money: here come the Cubans
    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee