Type: Discounted rate remortgage
Discounted term: Three years
Payable rate: 3.29%
Minimum loan: £25,001
Maximum loan: Up to 80% of valuation subject to a maximum of £300,000
Income multiples: Up to 3.5 times principal income plus 1.25 times second or three times joint
Conditions: Capital repayments of up to 10% a year allowed without penalty in the discount period, free valuation, free legal fees if in-house solicitors are used or £250 contribution towards legal fees, available for properties in England and Wales
Arrangement fee: None
Redemption fee: 3% of the amount repaid in the first three years
Introducer’s fee: 0.3% of the original loan subject to a maximum of £1,000
Tel: 01623 676360
This three year discounted rate mortgage is available for loans up to 80 per cent of valuation with no product fee. Its 2.3 per cent discount gives a payable rate of 3.29 per cent.
Discussing the merits of this deal for IFAs and their clients Highclere Financial Services partner Alan Lakey says: “The Mansfield Building Society has introduced a three- year discounted product for remortgages up to 80 per cent of the property value. The rate is 3.29 per cent and the product comes with a free valuation, free legal fees or £250 cashback and it carries no application fee.
“Unusually it allows loans to age 85, confirming that some lenders are prepared to retain commonsense within their criteria. Also, it offers additional latitude by allowing leasehold applications with 40 years remaining.”
Turning to the potential drawbacks of the mortgage Lakey feels that although the discounted pay rate is competitive, the reversion base rate of 5.59 per cent is unattractively high. “Having commended the company for offering loans to age 85, it is a shame that the mortgage is not portable, something that seems an anachronism in today’s ever-more flexible society.”
Lakey adds that Mansfield makes its products available throughout the UK, but by imposing a £300,000 limit, it succeeds in significantly reducing its scope for use in affluent areas. “It is restrictive in only allowing applications for houses and purpose-built flats. Anything unusual, such as converted flats, is prohibited,” he says.
Assessing the adviser remuneration, Lakey says: “The rate for procuration fees is 0.3 per cent, which is slightly below the rates used by mainstream lenders, but not unduly so.”
Looking at the main competition for the deal Lakey says: “Competition will arise from both discounted and tracker deals. For borrowers in the north, the Scottish Building Society offers an identically priced discount which benefits from being portable.” He adds that the Leek United Building Society has a three-year tracker at 2.79 per cent, which is portable, allows loans up to £500,000 and is available up to 85 per cent of valuation.
Summing up, Lakey says: “Rates and costs are important differentiating factors but we must not lose sight of the most important determining factor – will the lender agree the loan? The Mansfield offers up to three-times joint incomes with an alternative of 3.5 times main income plus 1.25 times second income. This is not particularly generous even in these stricter times, and this is often where the Abbey, Nationwide and Northern Rock excel.”
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Average