A self-cert lender operating outside the UK offering mortgages which do not require income verification or advice has launched today.
Payday lender Quick Loans will sell mortgages only accessible through the internet from its domain name selfcert.co.uk.
A report on The Times states the lender will launch with a tracker mortgage 2% higher than the Bank Base Rate. It is understood that loans will be capped at £500,000 with a maximum loan-to-value of 85%. Fees are expected to be around £600.
The lender’s offices will be based in Prague in the Czech Republic, according to the report, to allow it to circumvent the rules banning self-mortgages under the Mortgage Market Review (MMR). Its mortgage lending operation will be privately funded.
When news of the launch broke in November last year Graeme Wingate, founder of Quick Loans, said he expected demand to outstrip the capital held by the company through word of mouth and enquiries on the website. He said this was one of the reasons the firm didn’t need to use intermediaries to distribute the product. He said by sidestepping the need for advice he would save money and operate a more secure operation.
Wingate added that there were many instances of borrowers inflating income through brokers. He said the process would be safer if his company handled the process from start to finish.
The news of the non-advised product raised concerns within the Association of Mortgage Intermediaries. Commenting on the news in November, chief executive Robert Sinclair said lender operations which required borrowers to use an execution-only process to obtain a mortgage should, in his opinion, be avoided.
A loophole in EU legislation will allow the lender to bypass the requirement of giving advice to borrowers taking out this mortgage as long as it is based outside the UK.
An Financial Conduct Authority (FCA) spokesperson said: “A firm located in an EEA member state can provide a lending service under the Electronic Commerce Directive to UK consumers but the service has to be provided solely at a distance and on-line.
“This service, however, would not be regulated by the FCA and if something went wrong the FCA is not generally able to intervene, additionally there would be no recourse to the compulsory jurisdiction of the UK’s Financial Ombudsman Service.”
Wingate was not available to comment and his website was not operational at the time of publishing. He has issued a statement on his website which reads: “We are currently installing the site’s security certificate for today’s launch and it is taking a little longer than expected.
“Whilst the website is being prepared, we are currently contacting those who have registered an interest with us over the last two months.”
Samantha Partington is a freelance trade and consumer journalist writing about property and personal finance. Previously she worked worked for the Daily Mail and Property Week. She is the former deputy editor of Mortgage Solutions and editor of Specialist Lending Solutions.
Before becoming a journalist, Samantha worked as a mortgage broker and latterly for a mortgage, bridging and secured loan lender. Samantha is CeMAP qualified. Follow her on Twitter @SamJPartington1.
