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