The tool is designed to improve broker affordability insights
Digital mortgage lender Perenna has launched a new standard variable rate (SVR) comparison calculator to help brokers assess the impact of stressed rate affordability on traditional short-term fixed rate products.
The tool, available on Perenna’s intermediary site, enables brokers to calculate the approximate loan size Perenna can offer a client, subject to criteria, and compare it with loans stressed against traditional SVR mortgages.
Perenna does not require loans to be stress tested against SVR, which allows it to offer borrowers higher loan amounts compared to other mortgage products that have a reversion rate after a short-term fixed period.
Perenna cited as an example a borrower with a £1,500 monthly budget, seeking a 90% loan-to-value (LTV) mortgage over a 30-year term. The long-term lender said the borrower would typically qualify for £44,441 more from them than from other lenders, offering £231,031, compared to £186,590 from traditional lenders, based on average UK rates.
“This calculator is an important next step in our ongoing efforts to educate the industry on the impact different types of mortgage products have on affordability,” said Colin Bell (pictured), co-founder and chief operating officer of Perenna.
“Not only do longer-term fixed rate mortgages take the burden of interest rate risk away from the consumer, they also give an affordability boost which could make the difference between a one or two-bed, a leasehold or freehold, or getting onto the first rung of the housing ladder. It’s there to help brokers see clearly the benefits of long-term fixed rate mortgages. And the product comes with short ERCs of only five years, so clients have flexibility too.”
Perenna recently lowered rates across its remortgage, purchase, and retirement interest-only (RIO) products, with reductions of up to 50 basis points. The lender also introduced a new 10- to 15-year fixed-rate mortgage term for both remortgage and purchase deals.
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