‘MERC’ mortgage stands for:
Mainstream rate
Extended criteria
Redemption swap
Creative solution
Mainstream rate
The ‘MERC’ mortgage is priced at Bank Base Rate minus one basis point (0.01% bringing the MERC mortgage rate down to 5.24%) until 1 September 2010 at which point it reverts to Bank Base + 1.99%. This initial interest rate structure is available on extended criteria.
Extended criteria
The ‘MERC’ mortgage embraces GMAC-RFC’s near prime and light adverse criteria as well as the ordinary mainstream terms. Thus, borrowers with up to £3000 of CCJs, or two months’ arrears in the last twelve, will be considered for this product alongside discharged bankrupts or settled IVA clients.
Redemption swap
The ‘MERC’ mortgage features a rate/redemption swap, giving borrowers security that, if rates rise, their cost to redeem reduces. For every 0.25% rise in Bank Base Rate following completion of the mortgage, the early redemption charge will reduce by a like amount, and that reduction is then locked in forever. The redemption charge only applies to the initial 1 September 2010 period (i.e. no overhang).
Creative solution
The ‘MERC’ mortgage is a creative solution to the current problem where intermediaries would prefer to deal with an up to date, technology-led lender like GMAC-RFC whilst wishing to offer their clients the best possible interest rate. To make it easier to apply, there is no application fee to pay and free legals (or cashback in lieu) on remortgages. An added feature is that purchasers do not pay an application fee.
Julie Gaskin, corporate relations manager at GMAC-RFC, said: “There is nothing in the market to compare with this product - a truly creative solution for intermediaries experiencing long delays with the new lenders, since our technology means that a full mortgage offer need only be 25 minutes away.
“Although we have backed the ‘MERC’ product with substantial funding, it is a finite tranche, so only those applying early will benefit.”
