Southern Pacific Mortgage Limited has launched the first ever sub-prime five year fixed rate with a three year early repayment charge.
This allows the applicant the ability, after three years of the fixed term, to remain on the fixed rate, to switch free of charge to a SPML LIBOR + margin product, or to refinance without penalty (only one months notice is required).
The five year fixed rate with three year ERCs is from 5.59% and is being offered on SPMLs near prime range that allows a maximum of one CCJ for 500 (unsatisfied).
The fixed rate is offered on purchase and remortgage to a maximum of 85% LTV, with no higher lending charge payable.
It is available to full status and self certification applicants.
An arrangement fee of 795 is payable and can be added to the loan on completion, and the early repayment charge is 6% (December 1 2006), 5% (December 1 2007), and 4% (December 1 2008), with one months notice thereafter.
John Prust, SPMLs sales and marketing director, says:
“The new product will give applicants peace of mind about the future movement of rates.
“Should rates rise overall, then they have the security of the lower rate for the full five year term.
“If rates are lower after three years, then borrowers are free to seek other options without any early repayment charges being applied.
“Feedback from brokers and packagers has shown that an increasing number of applicants are seeking mortgages with no overhanging ERCs.
“SPMLs new five year fixed rate offers an even better option, with the ERC ceasing to apply well before the fixed term expires.