Platform Home Loans has entered the one-year fixed rate adverse credit market with the 7.3 per cent fixed rate mortgage.
The mortgage is aimed at people who have been turned down for mortgages by other lenders because they have defaulted on loans in the past. It has a fixed rate of 7.3 per cent for loans of up to 75 per cent of valuation for the first year of the loan. After this it reverts to the London Inter Bank Offered Rate, of 5.75 per cent, plus 3.25 per cent.
Borrowers are allowed a maximum amount of £5,000 in county court judgements (CCJs) and the mortgage has redemption penalties of six per cent of the advance in the first two years, and five per cent in the third year. The minimum loan is £100,000.
The 7.3 per cent mortgage is not the most competitive on the market. According to Moneyfacts on March 29, 2001, the cheapest one-year capped rate adverse credit mortgage is the 5.75 per cent mortgage from Bristol & West. This has a fixed rate of 5.75 per cent for loans of up to 85 per cent for the first year of the loan. The minimum loan is £25,000 compared to £100,000 and borrowers can have any number of CCJs totalling up to £10,000 twice the amount of the Platform Home Loans mortgage. The redemption penalties are also more competitive at five per cent of the advance for the first two years, and four per cent in the third year.