Pink Home Loans is bailing into the adverse credit market with its parachute mortgage.
The mortgage is aimed at people who are looking to buy a home but who either have a history of bad credit, or who have a number of county court judgements (CCJs) against them.
The mortgages rate is based around the London interbank offer rate (LIBOR). Clients will get a rate based on the level of LIBOR, and adjusted according to how many CCJs they have, if they have any arrears outstanding and what the loan to valuation amount is. A loan of up to 85 per cent of valuation, for a client with one to three months arrears in a year and CCJs totalling less than £2,000 will have a rate of 8.89 per cent, three per cent above the current LIBOR rate of 5.89 per cent.
A clients rate can be reduced by 0.5 per cent upon completion of a years direct debit payments. However the rate cannot go lower than one per cent above LIBOR.
Compared to the rest of the market the Pink Home Loans product is not that competitive. According to Moneyfacts the cheapest adverse credit mortgage with a level tied to LIBOR for clients with CCJs and arrears is the 8.19 per cent mortgage from Future Mortgages. This offers a rate of 1.5 per cent above LIBOR for loans of up to 85 per cent of valuation.