Complete Mortgage and Loan Services is offering a 95% LTV sub-prime base rate tracker from Birmingham Midshires, available through a limited number of packagers including Professional Mortgage Packagers Associates' members.
The 95% LTV is applicable to properties worth up to £150,000. The rate stands at Bank base rate plus 2.69% for the first two years with early redemption charges extending only over the initial two-year period at 5% in year one and 4% in year two.
In a feature designed to retain borrowers after the introductory period, the rate drops to base rate plus 1.99% for the rest of the life of the loan. Maximum CCJ value is £2,000 with none in the past 12 months and maximum mortgage arrears of two months, not increased in last 12 months. Income multiples are 3.50 x single plus 1 x secondary or 3 x joint. The arrangement fee is £499 with proc fees of 0.50%. The deal is for status applicants only.
Tony Salentino, director of CMLS, says: “This product offers an opportunity for sub-prime applicants to rebuild their credit profile and move to an attractive lower rate after two years. Increased property values mean the LTV will have dropped after two years so the lender is reflecting the decreased risk by lowering the rate.
“It is also rare for 95% LTV to be offered with levels of £2,000 CCJs and two months' arrears, The product is a limited tranche so early application is advisable.”
Jeff Knight, head of marketing services at GMAC-RFC, says: “It's not particularly risky or radical. We've been offering up to 95% LTV on our adverse range for a while. The only difference is ours is linked to LIBOR.”