The lender, which launched last August, had previously offered each of its products at a rate of 8.55% (LIBOR + 8.00%).
It said the changes were due to lower funding costs and to better target the credit repair market.
The 5.42% (LIBOR + 4.90%) product is available up to 60% loan-to-value with other rates available up to 75% LTV.
As Mortgage Solutions exclusively revealed last week the lender will look to transfer existing borrowers to the new lower rates in due course.
Magellan’s Matt Gilmour had previously described mortgage brokers as ‘fast asleep’ for failing to recognise what it could offer consumers. Mark Snape, lending managing director at Magellan, said the firm had changed the emphasis of its products following adviser feedback.
“It became apparent to me when I joined the business earlier this year that brokers were confusing Magellan with the type of sub-prime lenders that exited the market prior to the credit crunch,” he said.
“Having worked in that market for many years, I was aware that the type of business which used to be written by those lenders was very different to the business Magellan is targeting today. I therefore felt there was a need to change the focus of our products.”
Snape said the lender would only consider applicants who had suffered a demonstrable ‘one-off’ life event which had caused them financial difficulties. Borrowers are not allowed to have incurred any new adverse credit within the last 12 months
“Our range is targeting borrowers who have suffered one-off life events such as redundancy, divorce, or long-term illness which led to financial difficulties. However, they have got their finances back on-track and now deserve a second chance,” Snape added.
“The new lower mortgage rates, along with changes to the way we assess affordability, means that more applicants will now have access to competitively priced mortgage funding. We have also made a number of criteria changes, including raising the maximum LTV to 75% for borrowers in debt management plans and allowing our fees to be added above our maximum LTVs.
The lender’s products are available to brokers affiliated with the Sesame, Intrinsic, IN Partnership, Pink Home Loans, First Complete, Homeloan Partnership, Mortgage Advice Bureau, The Whitechurch Network and Stonebridge networks.
