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Kensington targets self-employed

Kensington Mortgages

Near Prime One Year Fixed Rate

Type: Fixed-rate mortgage

Fixed term: Until November 30,2006

Fixed rate: Up to 90% of valuation 5.3%, up to 80% of valuation 4.9%, up to 65% of valuation – 4.5%

Minimum loan: Up to 90% of valuation 36,00, up to 80% of valuation – 25,001

Maximum loan: Up to 90% of valuation subject to a maximum of 300,000

Income multiples: Up to 3.5 times principal income plus second or three times joint

Conditions: Capital repayments of up to 10% a year allowed without penalty, 250 cashback, self-employed mortgage payment protection option available, 0.25% loading for self-cert applicants

Flexible features: Overpayments, underpayments, payment holidays, lump sum withdrawals

Arrangement fee: 595

Redemption fee: 7% of the amount repaid in year one, 6% in year two, 5% in year three, thereafter interest to the end of the month

Introducers fee: 0.5% of original loan subject to a maximum of 1,500
Tel: 0800 111020

Kensington Mortgages has introduced this one-year fixed-rate mortgage with rates of 4.5-5.3 per cent, depending on the loan to valuation. It is aimed specifically at the self-employed, with a mortgage payment protection option designed specifically for this market.

Park Row Associates sales director Kevin Paterson believes Kensington is going after a particular niche with this product aimed at the self-employed. He says: There is a minimum requirement of one years accounts or, for a 0.25 per cent loading, the client can have a self cert mortgage, although there is still a need for an accountants certificate.

Paterson feels the one-year fixed rate is a bit of a gimmick, especially when there is a two-year overhang on early redemption charge. However, he feels the adviser remuneration of 0.5 per cent is reasonable.

Discussing the negative aspects of this deal Paterson says: There is a chunky arrangement fee of 595, although there is one free valuation, plus the two year overhang on early redemption penalties is a bit restrictive. This is compounded by a lack of portability of the loan which really ties the client down, there is a new mortgage facility which might allow the client to get a refund on all or some of the early repayment charges they may have suffered but the clock will start again.

Paterson thinks Kensington has a near monopoly on this type of near prime short term fixed rate. However, he says alternatives from Igroup and GMAC are competitive one-year fixed products.

In conclusion Paterson says: I can’t imagine that this will fly off the shelves but it certainly has a niche.

BROKER RATINGS

Suitability to market good
Competitiveness of rate: Good
Flexibility: Poor
Adviser remuneration: Average

Overall 6/10

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