The mortgage product tracks 0.94 per cent above Bank Base Rate, currently 5.44 per cent, for two years and is available to customers with a history of arrears, CCJs or bankruptcy.
Other features include a ‘switch-to-fix’ option at any time during the deal period, no arrangement fee and £500 cashback. Underpayments and payment holidays are allowed, along with overpayments of up to 20 per cent annually. There are no early repayment charges (ERCs).
Broker fees are up to 0.75 per cent and there is an additional 0.20 per cent available if the ‘switch-to-prime’ option that is available after the deal period, subject to payment record, is exercised.
Tony Burdin, head of group marketing for Scarborough Building Society, said: “We believe the product we have come up with offers a number of distinctive features, including the switch-to-fix option, which enables borrowers to move to a credit repair fixed rate at any time, even during the ERC period.
“We think customers deserve the chance to consider alternative solutions from high-street mortgage lenders like ourselves. As a mutual lender, our approach is centred around offering added value to customers, including those who have experienced credit difficulties in the past and need a helping hand to get their finances back in order.”
Mark Chilton, managing director of Purely Mortgages, said: “The pricing of the product is reasonably attractive. These drop-lock products come and go, but it has never been used in non-conforming before. The only problem with them is that the customer never knows what the fixed rate is going to be and this could lead to a non-conforming client being more exposed. But it is difficult to say without seeing the small print. There is always a risk in the non-conforming market.”
