View more on these topics

Precise offers prime deal for near prime market

Precise Mortgages – Near Prime Home Owner 2-Year Fixed

Type: Adverse credit fixed-rate mortgage

Fixed term: Until December 31, 2013

Fixed rate: 5.49%

Minimum loan: £25,001

Maximum loan: Up to 70% of valuation subject to a maximum of £300,000

Income multiples: Based on affordability

Conditions: One default up to £1,000 allowed in the last 24 months, but none in the last three months, one CCJ up to £750 allowed in the last 24 months but none in the last three months, up to one month’s arrears allowed in the last 36 months but none in the last 12 months, £250 cashback, free standard valuation and assessment fee subject to a £355 maximum, available for properties in England and Wales

Arrangement fee: £2,295

Redemption fee: 3% of the original loan in year one, 2% in year two

Introducer’s fee: Up to 0.5%

Tel: 0800 116 4385

Precise Mortgages has launched a new range of near prime deals for borrowers who may be struggling to get a mortgage from high street lenders. One of the deals in the range is the near prime home owner 2-year fixed, which is available to 70 per cent of valuation.

Putting this deal in to its market context, London & Country mortgages head of communications David Hollingworth says: “Only a few years ago the market was awash with products that would cater for any conceivable client situation.  That is very different now and the high street lenders are now really only interested in the squeakiest applications.”

However, Hollingworth highlights a small number of lenders looking to develop products that will serve those that cannot tick all the boxes and who are recovering from prior credit issues.  “Precise Mortgages features prominently in that group and the attraction of this deal will be very much based in its criteria,” he says.

Looking at the product in detail, Hollingworth says: “The rate of 5.49 per cent with a £2,295 fee may not look initially appealing for a two-year fix but the ability to consider applicants that have had had a history of defaults, arrears or CCJs is clearly the draw here.”

Hollingworth points out that the deal also offers incentives of a £250 cashback and a free valuation, which he says will certainly help with set up costs.  “This product offers up to 70 per cent LTV, but other rates are available at a higher LTV too,” he says.

Turning to the less attractive aspects of the deal, Hollingworth says: “The market for those customers falling outside the narrow boundaries of today’s mortgage market is so small that it is really difficult to take issue with any product catering for anything out of the ordinary.  “The fee is quite big, but many borrowers will want to keep the rate down, and it is also countered by the cashback and free valuation.”

Discussing possible competitors, Hollingworth says: “The lenders that will come up against Precise are bound to be Kensington, GE Money and Platform. Each lender offers different criteria and the right choice will tend to come down to the individual client circumstances.  Some may go further in one area but be slightly tighter in another.”

Hollingworth adds that GE Money’s specialist near prime GEM2 product offers a two-year fixed rate at 5.34 per cent with a £1,995 fee.

“It has lower rates for those with a better credit profile too. Kensington’s prime one range offers a remortgage 2-year fix at 5.74 per cent up to 75 per cent LTV. This has a £1,499 fee, with free valuation and legal work. 

Summing up, Hollingworth says: “The sub-prime market reached epic proportions in 2007 and clearly will now be a very different animal.  Products are now priced for risk and so will carry higher rates.  However there are customers getting back on their feet that will benefit from the products that lenders like Precise are developing.”

BROKER RATINGS

Suitability to market: Good

Competitiveness of rate: Good

Flexibility: Average

Adviser remuneration: Good

Overall 8/10

Recommended

13

Ford wins judicial review against FSA

Keydata founder Stewart Ford has won the judicial review he brought against the FSA challenging the use of legally privileged information in its investigation into Keydata. Mr Justice Burnett formally handed down his judgment on the case today. At the two-day hearing at the Royal Courts of Justice in London in July Ford’s lawyer Mr […]

Liontrust pays 30% less for Occam after asset fall

Liontrust is to pay 30 per cent less for Occam due to a fall in the emerging market specialist’s assets under management. The group first announced in August it was to buy the firm and a clause in the agreement allowed it to scrap the bid if assets fell below $150m (£97m). Occam had £124 […]

Network firms see opportunity in simplified advice sector

Network members are more interested than other IFAs in offering a low-cost mass market service, according to research from Technical Connection. The company commissioned 100 interviews with advisers who were either qualified to QCF level four or will be within a year, to find out their expectations of how the advice market will look in […]

1

Money Marketing launches free RDR seminars

Money Marketing is holding a series of free RDR invitational seminars focused on the key issues facing advisers as we approach the 2013 start date. Speakers include Scottish Life chief executive John Deane, Money Marketing columnist and Churchill Investments director Chris Gilchrist, Legal and General director of platforms and policy Danny Wynn, Standard Life UK […]

The return of emerging markets

Ewan Thompson, Head of Emerging Market Equities, Neptune Although in political terms 2016 will be remembered for the seismic shocks of the Brexit vote and Trump’s presidential victory, the year was also a watershed for the global economy and emerging markets in particular. Following five years in the wilderness, the conditions are now in place […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment