A new lender has become the first provider since the credit crunch to launch mortgages for sub-prime borrowers.
Magellan Homeloans is offering borrowers a choice of five products, each accommodating different levels of credit impairment depending on the loan-to-value (LTV) ratio. The maximum LTV is 75% and all products have the same pricing, which is currently 8.55%.
The lender said the mortgages will only be available to borrowers who can prove that their adverse credit histories were caused by one-off life events, such as bankruptcy, redundancy or bereavement.
Applicants with CCJs, missed secured/unsecured payments, defaults, bankruptcy orders, individual voluntary arrangements and debt management plans will all be considered. However, borrowers will need to have a clean credit history for the previous 12 months.
The mortgages will be available to purchase or remortgage borrowers over the age of 25 with a minimum income of £25,000. The maximum mortgage advance is £400,000.
"In our opinion, a short-term financial wobble should not preclude borrowers from mortgage finance on a long-term basis. We're delighted to be piloting a new proposition which gives credit impaired borrowers a real chance to obtain mortgage funding once again," said Matt Gilmour, managing director of Magellan Homeloans.
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