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Prime example from GMAC

GMAC-RFC

Status Near Prime 4.85%

Type:
Adverse credit tracker mortgage with discount

Discounted term:
Six months

Discount:
1%

Payable rate:
4.85%

Tracker term:
Lifetime of loan

Tracker rate:
1.85% above Bank of England base rate

Minimum loan:
£25,001

Maximum loan:
Up to 90% of valuation subject to a maximum of £250,000

Income multiples:
Up to 90% of valuation &#45 up to three times principle income plus second or 2.75 times joint, up to 85% of valuation &#45,up to 3.5 times principle income plus second or three times joint

Conditions: CCJS in last three years up to a maximum of £1,000, none in last six months, up to one month&#39s mortgage arrears in last 12 months

Redemption fee:
6% of amount repaid in year one, 5% in year two, one month&#39s interest or notice thereafter

Arrangement fee:
£395

Introducer&#39s fee: 0.75% of original loan

Tel: 01344 477477

GMAC-RFC&#39s Near Prime 4.85% is a base-rate tracker mortgage available up to 90 per cent of valuation and has a 1 per cent discount in the first six months.

Park Row Independent Mortgages managing director Kevin Paterson thinks that overall, the GMAC deal is not a bad product for a specific niche in the market, but he feels there is not a lot in it when comparing to the main competition. He says: “GMAC&#39s new near-prime product is competitive in the minor adverse market, It is essentially a tracker rate with an initial six-month discount of 1 per cent. Many schemes do not allow for minor adverse in the rate they make available but I believe that GMAC&#39s does.”

Paterson believes GMAC&#39s flexible approach to underwriting will be useful. He regards the adviser remuneration of 0.75 per cent as attractive and likes the fact that there is no mortgage indemnity premium required.

Looking at the drawbacks of the mortgage Paterson says: “Given GMAC&#39s approach to underwriting I am disappointed that the loan to value only goes up to 90 per cent. Equally, I think the redemption penalties are particularly punitive and the income multiples are a bit on the low side.”

Paterson thinks competition could come from Mortgages Plc&#39s two-year discount at 4.8 per cent but points out that this deal has an extra year&#39s overhang in terms of early redemption penalties. He also thinks Platform&#39s 4.75 per cent two-year discount could be an alternative to the GMAC product.

BROKER RATINGS;

Suitability to market: Average
Competitiveness of mortgage rate: Average
Adviser remuneration: Average

Overall 7/10

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