We re providing a soludon to a group of borrowers who have been disenfranchised by other lenders AUG

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2 Who are Magellan Homeloans? Ignoring sub- prime borrowers won t make the problem go away. They need help to get back into mainstream finance We re targedng borrowers with a significant adverse credit history, who have maintained a clean credit record for the past 12 months and can afford the loan for which they are applying We re providing a soludon to a group of borrowers who have been disenfranchised by other lenders Magellan provides a fully transparent and fair way to do that The senior management team have many years experience of working in the UK residendal mortgage market and have a detailed knowledge of the impaired credit sector We are fully authorised and regulated by the FCA AUG A new mortgage lender launched in August this year All underwridng, processing and post compledon administradon is undertaken by Magellan Homeloans at our head office in Leatherhead

3 But other lenders already help borrowers with an impaired credit record? Other lenders will only help borrowers who are near prime - they won t help borrowers with significant levels of historical adverse credit Magellan doesn t impose a limit on the amount of historical adverse credit we ll consider CCJs up to any value and defaults and arrears, provided the borrower has not missed any further payments in the past 12 months We ll also consider discharged bankrupts, IVAs and borrowers with debt management plans and debt relief orders And we ll lend to the self- employed with just 1 years trading record

4 So will Magellan lend to anyone? Borrowers must: Have a clean credit record for at least 12 months Be able to demonstrate the reasons for their financial difficuldes and how they have overcome them Have a minimum 25% deposit Be able to afford the mortgage for which they are applying

5 What products and rates do you offer? Our proposidon is very straighzorward: 5 products accommodadng different levels of credit impairment depending on loan to- value rado (a full product guide can be downloaded from Available for purchase or remortgage and we ll allow debt consolidadon One charging rate of LIBOR + 8% currently 8.55% No early repayment charges Loans from 50,000 up to 400K for borrowers throughout England & Wales 1.5% compledon fee (min 995) and applicadon fees dependent on property value

6 But 8.55% is higher than the rest of the market? It is because we ll accept a greater risk than the rest of the market Near prime lenders typically offer rates of between 3.98% and 6.99% (see lender comparison page) If your client fits a near prime lender s criteria, then you should place the case with them If your client doesn t fit elsewhere, then Magellan is a valid opdon Keep rates in perspecdve on a 100K repayment loan over 25 years, a 6.99% rate = 714 per month whereas a rate of 8.55% = 817 pm. More expensive, but not dispropordonately so and sdll cheaper than some other forms of credit and possibly rendng The important issue is affordability, not rate. The borrower must be able to comfortably afford the loan for which they are applying

7 Aren t you luring- in and then locking- in vulnerable borrowers? We don t market our mortgages direct to borrowers and borrowers can t apply to us direct All borrowers must take independent advice from a qualified mortgage broker before applying for a mortgage with Magellan. The only route to Magellan is via Appointed RepresentaDves of a network on our panel If an applicant proceeds and becomes a borrower, they are free to move to another lender at any Dme. We have no Early Repayment Charges

8 What sort of applicants should consider Magellan? Example 1 missed payments and defaults Mr Moore wants to borrow 150k on a property valued at 330k He was made redundant in April 2012 and fell behind with 2 missed payments on 2 credit cards and incurred defaults of 3,905 and 5,361 on two other credit cards He had no adverse credit before April 2012 and has had none since. All of the balances have since been selled in full In April 2012 Mr Moore became self- employed and set up his own business which has been a success 3 months bank statements we have received show healthy credit balances We re happy to lend!

9 What sort of applicants should consider Magellan? Example 2 business downturn resuldng in mortgage arrears Mr WhiDng is looking to borrow 385k on a property valued at 550k He is self- employed and had a large contract with a company which unfortunately went into liquidadon in Jan 2012 owing him over 300k This put a massive strain on his business finances whilst he re- structured his exisdng contracts and looked for new ones As a consequence he went 5 months in arrears on his mortgage payments He has subsequently re- built his business and the mortgage arrears have since been bought up to date We re happy to lend!

10 What sort of applicants should consider Magellan? Example 3 Divorce leading to arrears and CCJ s Ms Bradley is looking to borrow 79k on a property valued at 106k She suffered a marital breakdown and subsequent divorce in Aug 2011, which resulted in 4 months mortgage arrears and 2 small CCJs which have since been sadsfied Since January 2012 she has got her life back on track and has never incurred any further adverse credit with all her monthly commitments being met We re happy to lend!

11 In Summary We lend to borrowers with any amount of historical adverse credit, provided that: They can produce a sadsfactory Adverse Credit ExplanaDon (ACE) they have maintained a clean credit record for 12 months they can afford the loan for which they are applying Magellan won t be appropriate for all borrowers with an impaired credit record, but we will be right for some At 8.55% our rate is higher than other lenders because we accept a higher risk. Affordability is more important than rate A financial wobble shouldn t prevent borrowers from ever having access to finance again, provided they can prove they have regained control of their finances

12 Further facts that may be of help: Other lenders that will help borrowers with adverse credit Aldermore: CCJs/defaults none in last 36 months Arrears none in last 12 months Bankruptcy/IVA - none Rates from 3.98% % GE Money: CCJs 1 in last 24 months max 1k Defaults number 2 in last 24 months value 1k in last 12 months, months unlimited Arrears none in last 12 months must be up to date Bankruptcy/IVA no specified criteria Rates from 4.64% % PlaIorm: CCJs/defaults none in last 12 months, max 500 Arrears none in last 12 months Bankruptcy/IVA considered if discharged or completed more than 4 years ago Rates from 3.88% % Precise: CCJs 1 in 24 months max 1k in 12 months, max 2.5k in 24 months Defaults 2 in 24 months max 1.5k in 12 months, unlimited thereaqer Arrears 1 in 12 months, 3 in 36 months (worse status) Bankruptcy/IVA considered 6 years from discharge date Borrowers must have a clean credit record 3 months prior to applicadon Rates from 4.44% % Saffron: CCJs/Defaults max value 1k in last 24 months Arrears none in last 12 months, max 2 in last 36 months Bankruptcy/IVA not acceptable Rates from 5.59% % Note: The above criteria are correct at 1 st Sept Some mainstream lenders may accept minor adverse credit on an ad hoc basis, but do not publish set criteria.

13 Further facts that may be of help: When to think about recommending Magellan Homeloans Your client may struggle to obtain a mortgage from another lender if: Arrears they have 3 months or more arrears which have since been cleared or are sdll outstanding Bankruptcy/IVA they were a discharged bankrupt 12 months ago or had an IVA that has been sadsfactorily conducted in last 12 months Debt Management Plans/Debt Relief Orders they are subject to either Self- employed they have only been trading for 1 year Also bear in mind that other lenders may use a credit scoring system, which will make life more difficult for your client to obtain mainstream finance

14 Further facts that may be of help: Acceptable Credit ExplanaDons (ACE) Pregnancy Maternity leave Divorce SeparaDon Serious illness or accident Stabilised reducdon in income Unemployment or redundancy Death of a close family member Serious illness or accident of a close family member Business interrupdon or failure caused by counterparty failure or default Business failure caused by mismanagement (only acceptable for employed applicants) Errors or failures of the banking system VicDm of stolen idendty or fraud by a third party Note: Documentary evidence of the reason for the adverse credit will be required. Full details are in our Lending Manual, which is downloadable from

15 Further facts that may be of help: Assessing affordability Clients must be able to comfortably afford their mortgage. We calculate affordability by: CalculaDng all household income DeducDng all household expenditure Also deducdng their proposed mortgage payments, based on a stress test mortgage rate of 10.8% rather than 8.55% Ensuring their debt- to- income rado is no more than 35% Checking they are not dependent on short- term credit

16 Further facts that may be of help: Submitng an applicadon Submit a DIP via your network s approved distributor They will check it and let you know if the DIP is OK The DIP will be forwarded to Magellan and we will give a yes or no Assuming a yes, a full applicadon will need to be completed and suppordng informadon provided the distributor will provide packaging support

17 Further facts that may be of help: How to get further informadon From our website: Via your own network/distributor us at: Phone us:

18 Q&A Thank you. We will now take quesdons from the floor. If you would like to ask us a quesdon please use the messaging tool to the right hand side of your screen.

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