Optimum Credit Finance

A new face in Pilot Training finance...

At the time of my own application to L3 Airline Academy the then well-known bank in the field, BBVA, offered a bespoke pilot training mortgage product but sadly withdraw it from the market in mid to late 2017. A similar offering from Secure Trust Bank received a similar fate and ceased earlier in the year. This left a fair number of hopeful pilot training applicants in limbo as to how to finance their training and, as such, I received a number of questions from readers about what do to, how to fund the courses etc etc. You think of it, it was asked. Now, unfortunately I'm not a financial guru in that respect so had to reply with something along the lines of "seek out a financial advisor and go from there".

I have to say, I'd have had no idea what to do if I were in that position. BBVA was my only option for training to be a pilot via an integrated route and with them having left, I'd have been lost and most likely out of the running entirely and so it makes me somewhat pleased to hear of a new player to the pilot training field, Optimum Credit. As with all things in this blog, I felt I'd do a little research and provide an outline as to their offering, but do please read the note below.

Note:
My explanation of the Optimum Credit offering is based purely on information available from both L3 Airline Academy and the credit provider as at the date of this blog post. The details given below are in no way as thorough as that I gave for BBVA due to the simple fact I've not had to personally go through the application process. With this said, by-and-large the Optimum Credit offering is still a second-charge mortgage which is, in essence, somewhat identical to that of BBVA in its nature. For the most up-to-date information please reach out to the credit broker directly.

So, what exactly is it that Optimum Credit offer cadet pilots?

Similarly to BBVA...

Optimum Credit, who for ease i'll call "the bank" from now on, offer a second-charge mortgage to provide funding for pilot training upto a value of £250,000 (Source: L3 Airline Academy). One would presume, although I may well be wrong, that the bank will set an upper limit of funding at the expected course cost plus a reasonable cost for living should you also wish to apply for that. Being a mortgage in nature, the funds will need to be secured against a UK property. I explain more on this below.

Property Security...

The bank states it will only accept properties where the total ratio of debt secured, inclusive of any funds you wish to borrow from them, does not exceed 85%. This percentage is known as a Loan-To-Value (LTV) and you can calculate the current LTV by taking the total value of existing mortgages or securities, dividing that value by the current market value of the asset and multiplying the result by 100. The answer will help you to understand the maximum Optimum Credit could lend you. See the example below.

Loan-To-Value Example
The property John is to use for loan security is currently worth £250,000. Optimum Credit will not permit the total lending on a property to exceed 85% which equates to £212,500. At the most recent statement the balance of John's mortgage was was £120,000. Working out the LTV by taking £120,000 dividing it by £250,000 and multiplying the result by 100 he finds the LTV on his property to be 48%. This leaves 37% equity in his property to which the bank will consider an application against. John can therefore borrow up to £92,500.

Unlike BBVA, it seems that Optimum Credit will only accept homeowners who own their home and have an existing mortgage. Those with no mortgage at all may find more preferential rates from highstreet lenders so i'd say consult a financial advisor in such an instance.

What exactly is on offer from Optimum Credit?

According to the information made available by L3 Airline Academy:

• Up to £250,000 to cover both tuition and living costs, subject to your status.
• Loans are offered to UK and EU nationals with rights to reside in the UK.
• Loans are to be secured against a residential UK property.
• Loans are repayable over a period of 3 to 25 years.
• Representative 4.9% APR (variable).

What are the conditions?

Like all financial products there are a few conditions to be met first. At the time of writing Optimum Credit's outlined terms are as follows:

• You must own your the property, with an existing mortgage.
• Joint property owners must become joint borrowers.
• An affordability assessment will be conducted.
• A credit check will be carried out.
• A fraud check will be carried out.
• A property valuation may be required.

What about interest, payment holidays and discounted repayments, etc?

At the time of writing i'm actually unable to establish if the pilot finance is actually a separate offering. I'm inclined to say it's not, but again I'm willing to be proven wrong. A second charge mortgage is quite common with many people taking them out to fund a variety of things in life and with that I'd go so far as to say that the pilot funding will be offered under the terms of the typical Optimum Credit loans. Thusly, if that is correct (but do please let me know if i'm wrong), the following is offered by the bank on all mortgage products as part of your application:

• A competitive fixed, discounted or variable rate product.
• Opportunity to fix interest for between two and five years.
• Discounted repayments available for between 12 and 24 months (similar to BBVA).
• Additional payments can be made with no penalty.

Unlike the major selling point of BBVA's offering, there is no explicit mention of a payment holiday. Perhaps bring it up with the mortgage advisor you speak to on application for funding. I'd be very keen to hear if they are open to offering them to applicants so if they do, and you happen to apply then please let me know so I can update this post for the benefit of everyone else :-) 

How do I apply or find out additional information?

The following is taken from the L3 Airline Academy website:

Students with an offer can submit an application online up to six months prior to course start, and if accepted, opt for the loan to be issued before or during your studies. L3 CTS will be required to verify your acceptance to the course before any funding is released; this will be completed after you have executed and fulfilled the Prerequisite Requirements set out in Cadet Training Agreement. To find out more about applying, contact Optimum Credit on 0808 1969 622 or via email on pilotfinance@optimumcredit.co.uk. You can also find out more information about Optimum Credit Ltd at https://www.optimumcredit.co.uk/