The new range of 85 per cent LTV products, provided by Precise Mortgages, can be used to assist people who have been declined by a traditional high street lender or experienced problems relating to defaults, county court judgements and mortgage arrears.
People with up to two defaults in the last 24 months will be considered as long as the amount does not exceed £1500 in the last 12 months. Potential customers who have been subject to one county court judgement in the last 24 months will be considered as long as the amount of money in question has not exceeded £1000 in the last 12 months.
Two-year tracker rates start range between 3.79 per cent and 6.29 per cent. The rates on two-year fixed mortgages range between 3.89 per cent and 6.59 per cent and customers selecting these products will also get a partial or full refund of the valuation fee, £300 cashback and a free re-mortgaging legal service (only available in England and Wales).
Charges
Arrangement fees on the products are either £995 or £1495. Customers will also have to pay valuation and assessment fees.
Provider view
John Cupis, managing director, mortgages for Sesame Bankhall Group, said: “At Sesame Bankhall SLS we continually strive to help brokers place and process a wide range of mortgage cases in this specialised area, where we offer some of the most competitive procuration fees in the market. I am confident that these products will prove popular with advisers.”
Alan Cleary, managing director for Precise Mortgages, said “Our range of 85 per cent LTV products are only available via a select distribution panel. We are pleased to be working with Sesame Bankhall SLS given their reputation for assisting brokers place and process cases within this area of the market. We expect to increase volumes over the coming months as confidence grows about the improving prospects for the UK housing market.”
Adviser view
Colin Parkin, managing director of Lincoln-based Ample Financial Services, said:
“The fees are quite expensive for the type of product on offer but that’s consistent with this type of lending. The arrangement fees is quite high and there is a 0.50 per cent procuration fee, which is the inducement to the adviser. That’s probably about 0.25 of a percentage point higher than the average procuration fee. If somebody could get a standard deal, there is a temptation for the adviser to recommend a sub-standard deal because, one, it would be easier to go through and, two, they would earn a bigger fee on it, which I don’t agree with.
“All of the rates and costs are consistent with this type of lending and is costed for this section of the market. When somebody has financial difficulties they have to pay more to get the same thing as a normal everyday clean client. The argument is: should they pay more? Yes, I believe they should because they shouldn’t have got in a mess in the first place. Are they more likely to get in trouble in the future? Yes, they are because they have already demonstrated an inability to mis-manage their budget. This type of lending just stores up trouble for the future.”
Verdict
This product is not uncompetitive for its target market, but clients need to be aware that their financial history means they will have to pay more to borrow money.
