Masthaven mortgage review: Is it the best bad-credit lender?

15 min Read Published: 07 Mar 2022

Masthaven review

*Masthaven Bank has announced its plans to stop offering mortgages for new and existing customers over the next 2 years*

What is Masthaven?

Masthaven is a specialist lender that provides mortgages for borrowers who are likely to be turned down by mainstream lenders. It takes a flexible approach to underwriting, which means it looks at the wider circumstances behind an individual application rather than discounting a potential borrower because of mistakes they may have made in the past or unconventional conditions in the present. As such, it lends to people who have relatively major financial black marks, including recent County Court Judgements (CCJs), missed mortgage payments or bankruptcy. Indeed, it ignores CCJs or defaults that are less than £300, older than 36 months or incurred between months 24-36 but which are satisfied. There is also the potential for unsatisfied CCJs or defaults to be accepted on a case-by-case basis. 

Overall, it is one of the most accommodating mortgage lenders for those with impaired credit, although that comes at a price, with interest rates considerably higher than with mainstream lenders. Because of the specialist nature of the business, it is only available through an intermediary rather than direct to consumer. If you are interested in getting a Masthaven mortgage but don't have a mortgage broker, we like Habito* as it offers independent whole-of-market advice and has a good customer service record. 

Masthaven mortgage key features

  • Specialist lender for people who may struggle to get a mortgage elsewhere
  • Accepts applications from those with recent CCJs, missed mortgage payments and bankruptcy
  • Fee-free remortgages up to 80% LTV
  • Also offers bridging loans and savings accounts

Masthaven mortgage Pros and Cons

Pros Cons
tick Does not credit score and instead uses flexible underwriting so even those with severely impaired credit history may still be approved

tick Accepts older borrowers on a case-by-case basis.

tick No fees on remortgages up to 80% LTV

tick Options for self-employed applicants, including first-time contractors

cross Interest rates are relatively high compared with mainstream mortgage lenders, so your monthly repayments will be higher, as well as the total amount you repay

cross The valuation fees, although on a sliding scale relative to the property's value, are quite high compared with some of its competitors

What types of mortgages does Masthaven offer?

Masthaven has a range of residential, buy-to-let and second-charge mortgages. It also offers bridging finance, which is a short-term loan that can help facilitate a house purchase if there are problems with the chain. In terms of its residential mortgages, it has 2-year and 5-year fixed rate products, which are available to first-time buyers, movers and those looking to remortgage.

Masthaven has two levels of mortgage products: MH0 and MH1. Each is based on the credit profile of the potential borrower, with MH1 designed for those with a higher level of impaired credit.

The differences in the two levels are summarised in the table below:

Product summary for Masthaven residential mortgages range

MH0 MH1
Maximum LTV 85% 75%
Maximum loan size £1m at 70% LTV

£600,000 at 75% LTV

£400,000 at 80% LTV

£1m at 70% LTV

£600,000 at 75% LTV

2-year fixed rate 3.04% at 70% LTV

3.24% at 75% LTV

3.59% at 80% LTV

3.69% at 70% LTV

4.09% at 75% LTV

5-year fixed rate 3.34% at 70% LTV

3.45% at 75% LTV

3.79% at 80% LTV

3.99% at 70% LTV

4.30% at 75% LTV

Lender fee £995 £1,295
Credit profile  

None of the following permitted within the last 24 months:

  • 1 missed mortgage payment
  • 1 unsecured credit account greater than £300 where the worst status is 3 or more regardless of whether the account has subsequently settled
  • 1 CCJ/default more than £300, whether satisfied or not

Worst status mortgage arrears = 1 in 24 months

Unsatisfied CCJs/defaults = 1 in 36 months

 

None of the following permitted within the last 3 months, however, Masthaven will allow 1 of the following if within the last 24 months:

  • 1 missed mortgage payment
  • 1 unsecured credit account greater than £300 where the worst status is 3 or more regardless of whether the account has subsequently settled
  • 1 CCJ/default more than £300, whether satisfied or not

Worst status mortgage arrears = 2 in 24 months

Unsatisfied CCJs/defaults = 2 in 36 months

What is Masthaven's lending criteria for people with bad credit?

Masthaven doesn't credit score and has a flexible approach to underwriting its mortgages, with the focus on "wanting to say yes". As such, it can accommodate relatively severe impaired credit history from prospective borrowers. For example, the lender ignores CCJs and defaults that are less than £300, older than 36 months or incurred between 24-36 months ago, but which are satisfied at the time of the application. There is also the potential they will accept larger and unsatisfied CCJs and defaults of more than £2,500 by referral.

In addition, it will consider borrowers with missed mortgage payments, worst status mortgage arrears and unsecured credit accounts. Moreover, it will approve mortgages for those who have been on a debt management plan that was satisfied more than 24 months before or for IVAs/bankruptcy or sequestration that have been satisfied or discharged more than 36 months previously.

It is worth noting there are only a handful of lenders in the market prepared to lend under these sorts of conditions. For details of others that do, read our articles "Which are the best mortgage lenders if you have an IVA?" and "Can I get a mortgage after bankruptcy?".

How much can I borrow with Masthaven?

As with the underwriting process as a whole, Masthaven adopts a flexible approach when deciding how much to lend, based on the individual circumstances of the applicant. The lender takes into consideration not only income, but also the number of dependents the person has, existing financial commitments and the LTV ratio for the mortgage. The aim is to provide a loan that is affordable for the borrower, even if interest rates go up in the future.

To get a clearer idea of how much you are likely to be able to borrow, it's a good idea to speak to your mortgage broker, who will have an insight into Masthaven's most up-to-date lending criteria and how much you can expect to secure based on your financial situation.

What interest rates does Masthaven charge on its mortgages?

In exchange for lending to people who may have struggled to secure finance elsewhere, Masthaven charges significantly higher interest rates than you would expect from a mainstream, prime lender. This is primarily due to the fact is has to balance out the extra risk the borrower poses to them in terms of the likelihood they could default on the loan or in other ways be a problematic customer. 

Its current interest rates at the time of writing are:

Masthaven mortgage interest rates

MH0 MH1
2-year fixed 3.04% at 70% LTV

3.24% at 75% LTV

3.59% at 80% LTV

3.69% at 70% LTV

4.09% at 75% LTV

5-year fixed 3.34% at 70% LTV

3.45% at 75% LTV

3.79% at 80% LTV

3.99% at 70% LTV

4.30% at 75% LTV

How long does it take to get a mortgage offer from Masthaven?

The average turnaround time from Masthaven receiving a completed application to issuing a mortgage approval varies depending on the time of year and how busy it is. At the time of writing, the average times for first-charge residential mortgages were:

  • Decision in principle referral - 24 hours
  • Documents reviewed - 2 days
  • Application underwrite - 1 day

Applicants should keep in mind that, because of the nature of the mortgages offered and the fact Masthaven considers more complicated cases, there may be a need to supply additional information or documentation to support your application. This could potentially add extra time to the application process.

What fees does Masthaven charge for its mortgages?

Masthaven charges fees on some, but not all of its mortgages. Its remortgage range, for example, is fee-free up to 80% LTV. For its core residential mortgages for first-time buyers and movers, there are a number of different fees payable including, in the first instance, a £150 application fee. In addition, there is a £995 lender fee on its MH0 range and a £1,295 lender fee on its MH1 mortgages. The lender fee can be added to the mortgage, although that means you have to pay interest on it at the same rate as your fixed rate.

The other cost you will incur is the valuation fee, which is charged on a sliding scale depending on the price of the property, starting at £220 for a £100,000 property through to £1,600 for a £2m property. There is also the option to pay extra for a more detailed home buyers' report, which starts at £375 and goes up to £1,900.

Can you make overpayments on your Masthaven mortgage?

As with many lenders, there is the option to overpay 10% of the balance of the mortgage each year without incurring a penalty. If you pay more than that amount, an early repayment charge is payable.

The early repayment charge for the 2-year fixed rate mortgage are:

  • 3% in year 1
  • 2% in year 2

The early repayment charge for the 5-year fixed rate mortgage are:

  • 5% in year 1
  • 4% in year 2
  • 3% in year 3
  • 2% in years 4-5

What is the maximum mortgage term with Masthaven?

There is a maximum mortgage term of 35 years across the Masthaven range, with the maximum age at the end of the term the 85th birthday of the oldest applicant. There is no maximum age for new applicants, but anyone over the age of 70 has to receive independent legal advice.

Masthaven customer reviews

According to independent customer review site Trustpilot, Masthaven has a rating of 2.8 out of 5.0. Overall, there is a division between 28% of respondents who deemed the company to be "excellent" and 50% who claimed it was "bad". However, with fewer than 30 reviews, it isn't a large enough sample to get a clear picture of how well-received Masthaven is with its customer base. As it stands, both the positive and negative reviews are centred on customer service.

Summary

As a specialist lender, Masthaven isn't for everyone. However, for those with seriously impaired credit looking to buy a property, it offers a lifeline with its flexible approach and generous lending criteria. The rates are higher than you would expect to pay elsewhere and, with that in mind, it is worth considering whether it is worth postponing your house purchase until your credit score has improved and you can secure a deal with a less-adverse lender. Indeed, all misdemeanours are removed from your credit file after 6 years and tend to have less of an impact the nearer you get to that 6-year point, so it is a good idea to get advice from a mortgage broker on how long you'd have to wait in order to get a better rate. However, if you don't have the luxury of time, Masthaven has an understandable appeal.

 

 

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