Type: Tracker mortgage
Tracker rate: 2.79% above Bank of England Base Rate
Tracker term: Two years
Payable rate: 3.29%
Minimum loan: £6,000
Maximum loan: Up to 75% of valuation subject to a maximum of £350,000
Income multiples: Based on affordability
Conditions: Capital repayments of up to 10% a year allowed without penalty, free valuation on properties valued up to £2.5m, free standard legal fees or £250 cashback
Arrangement fee: £995
Redemption fee: 2% of mortgage balance and plus repayment of £250 cashback or £200 towards cost of legal fees if mortgage repaid by May 2, 1011
Introducer’s fee: Refer to lender
This two-year tracker from Abbey for Intermediaries tracks at 2.79 per cent above the bank of England base rate, giving a payable rate of 3.29 per cent.
Belgravia Insurance Consultants consultant Paul White thinks this deal has many attractive features. He says: “The £350,000 loan limit should be sufficient for most cases. The combination of low rate and fixed £995 booking fee is a welcome departure from the norm of low rate with a high fee. The absence of a completion deadline removes that problem for the broker in a prolonged purchase. “
He adds that the free valuation helps cash-strapped mortgagors and the £2.5m property value limit is more than adequate. “The £250 cashback allows the broker to recommend external Solicitors, earn a little money and stay in control of the situation after the offer has been issued,” he says.
Turning to the less appealing features he says: “There is the unnecessary complication of the clawback period for the benefits package over-running the end of the tracker benefit period by one month. Although this has been given great prominence in the literature, remortgaging away from Abbey at the end of this deal needs to be timed correctly.” He adds that the maximum LTV of 75 per cent means big deposits are needed, particularly if people are buying rather than remortgaging.
Highlighting alternatives to this deal White says: “The Marsden has a number of lower rate deals, which may eclipse the Abbey, provided the client is happy with a smaller lender. Its 3.09 per cent discount with Free Valuation and legals has a £299 upfront fee and a £799 booking fee, which can be added to the loan. There is also a tracker at the same rate, with a marginally shorter end date, and an offset product at 3.29%, which is a lifetime tracker.”
White concludes: “The parent company, Santander, wants to rationalise its various UK brands and unify them all under that name. This makes sense as Abbey and Alliance & Leicester were competing in the same space. “ He adds that the merger will mean fewer competing products for consumers and brokers spending more time trying to get through to the centralised processing centre.
Suitability to market: Good
Competitiveness of rate: Good
Adviser Remuneration: Average