Mortgages PLC, the UK lender and subsidiary of Merrill Lynch, is launching a mortgage which allows borrowers to repair their credit record after just 12 months.
The product, which is the first of its kind in the UK sub-prime market, allows borrowers to then remortgage without incurring onerous redemption charges.
The new mortgage, which is available from November 20, is a major development for the adverse sector where it’s normal for mortgages to carry early repayment periods of two to three years.
It offers a choice of a one-year fixed or tracker with rates depending on LTV and status.
After 12 months, the borrower can then remortgage onto any other Mortgages plc product with introducing intermediaries and packagers earning full procuration fees. Alternatively, borrowers can remortgage to another lender if they wish to do so.
The product is available up to 85% LTV on heavy and 80% LTV unlimited products, any amount of CCJ’s or arrears, arrears with an adverse credit lender are allowed up to 75% LTV and all defaults ignored and full status or self-cert for either purchase or remortgage.
Also there is an optional higher lending charge, free valuation available an early repayment charge of 8% in first 12 months, 30 days interest thereafter and procuration fees payable within 24 hours of completion.
Pete Thomson, sales director at Mortgages plc, says: “This is a genuinely innovative product which gives borrowers, for the first time, a real opportunity to clean up their credit record and transfer onto a mainstream mortgage in as little as one year.
“Although the rates are slightly higher than normal for a short-term fixed or tracker, the product is perfect for borrowers who have experienced credit problems and want to get their finances back on track.
“After 12 months, they can remortgage onto any of Mortgages plc’s current products or, if they wish, remortgage to another lender.
“This is a real breakthrough in credit repair and I have no doubt it will be extremely popular with both intermediaries and borrowers.”