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Preferred target adverse credit

Preferred Home Loans is targeting the adverse credit market with its’ new 8.75 per cent mortgage, which does not offer the most competitive rate in that sector.

The mortgage is fixed at 8.75 per cent for loans up to 90 per cent of valuation until January 31 2002, after which it will revert to the London InterBank Offered Rate (LIBOR), which is currently 6.31 per cent, plus 2.75 per cent.

Preferred Mortgages has given the mortgage income multiples of 3.5 per cent times principal income plus second or three times joint. These are above the industry norms of three times principal income plus second or 2.75 times joint.

Customers who have county court judgements (CCJs) against them that total £10,000 can apply for the mortgage. The mortgage also has redemption penalties that stretch for two years after the fixed rate period has lasted. There are no compulsory insurances.

The most competitive mortgage on the market on December 11, 2000 is the 7.99 per cent fixed rate mortgage from Pink Home Loans. This has a fixed rate of 7.99 per cent for the first year of the mortgage, after which it will revert to LIBOR plus 3.5 per cent and also has extended redemption penalties. However the maximum total of CCJs on the Pink Home Loans mortgage is £3,000.

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