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Pink offers a taste of Freedom

PINK HOME LOANS

Freedom Finance FS 1 Year Discount

Type:
Discounted-rate mortgage

Discounted term:
One year

Discount:
1%
Payable rate:
4.83%

Minimum loan:
£25,001

Maximum loan:
Up to 90% of valuation subject to a maximum of £300,000,
up to 75% of valuation subject to a maximum of £500,000

Income multiples:
Based on affordability calculation and credit score

Arrangement fee:
£385

Redemption fee:
5% of amount repaid in year one, thereafter one month&#39s notice or 1% of amount repaid

Introducer&#39s fee:
0.35% of original loan

Tel: 08707 590 170

Pink Home Loans&#39 Freedom Finance FS 1 Year Discount has a 1 per cent during the first year of the mortgage term, giving a current payable rate of 4.83 per cent..

Charcol senior technical adviser Ray Boulger welcomes Freedom Finance&#39s entrance to the intermediary market via Pink Home Loans. He adds: “However, it is disappointing to see a new lender using old methods we would like to see disappear from the market, such as requiring a month&#39s notice or having to pay a penalty. It is also surprising to see a new lender not offering a 10 per cent a year penalty-free part-repayment facility.”

Boulger points out that the underlying rate tracks the Bank of England base rate plus 1.58 per cent,, giving a current underlying rate of 5.83 per cent. In his view, this is reasonable with most SVRs now around 6.25 per cent.

Boulger considers the product&#39s best features. He says: “Income is assessed on affordability, which will open the door to more borrowers than a deal based on less than generous standard income multiples. The affordability calculation is helpful for borrowers needing a relatively large loan in relation to their income, particularly those on below average incomes and joint applicants.”

However, he feels the £385 arrangement fee is a little high and complains that the discount is only 1 per cent for 12 months. He says: “For borrowers who don&#39t need above average income multiples this product is not competitive. The redemption charge is 5 per cent in the first year, which is totally out of proportion to the 1 per cent discount. It is disappointing for a new lender to also require a month&#39s notice after this to avoid a 1 per cent penalty.”

Boulger does not anticipate much direct competition as most discounts are either for less than a year or for at least 2 years. He feels the main competition will be from other lenders offering discounts up to 2 years who also calculate the maximum loan on an affordability basis.

BROKER RATINGS:
Suitability to market: Average
Competitiveness of mortgage rate: Poor
Adviser remuneration: Average

Overall 4/10

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