Posted by: the3rdi | June 8, 2010

A number of high street lenders are targeting the medical sector with inordinate facility renewal fees

A number of high street lenders are targeting the medical sector with inordinate facility renewal fees which is costing the industry millions of pounds per year, warns Birmingham-based Crystal Mortgages.

Products generally offer a market leading APR for the initial year of the mortgage or bridging loan term, after which a hefty fee is charged for the ongoing use of the facility.

The company points specifically to two ongoing cases with the financial ombudsman which expect to be found in the case of the applicant, not the lender.

The problem with financial lending in the medical sector is compounded by the number of lenders withdrawing from the market, primarily due to the high loan-to-value requirements of many applicants.

Roger Dewsbery, senior underwriter at Crystal Mortgages, said: “Every lender can see the benefits in targeting the medical market as there are literally thousands of businesses for sale, most of which are robust and produce a healthy turnover.

“This has obviously lead to a handful of major lenders introducing products that are wholly unfair and unfit for purpose.  All we ask is that potential applicants shop around and make sure they read the small print, otherwise they too could find themselves in a totally unsuitable deal.”

Crystal Mortgages recently launched a 100 percent commercial mortgage product designed purely for the medical sector, which does not operate with monthly facility renewal fees.

Surgeries, pharmacies, opticians, care homes and nursing homes can borrow from £30,000 upwards for between seven to 30 years.  Variable rates start from 2.5 percent over Bank of England base rate or LIBOR.

The product also includes a goodwill element, allowing applicants to borrow above the fair net worth value of the property.  Account serviceability and sector experience will be the key aspect of every decision, and up-to-date management accounts will be required.

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