Type: Tracker mortgage
Tracker term: Three years
Tracker rate: 2.49% or 2.54% above base rate available to all borrowers – 2.54% per cent includes homebuyer solution
Payable rate: 3.99% or 4.04%
Minimum loan: £6,000
Maximum loan: 75% loan to value up to £350,000
Income multiples: Based on affordability
Conditions: Free valuation and free legals for remortgages, free valuation and £250 cashback for homebuyers
Flexible features: Interest calculated daily and the ability to overpay 10% of the mortgage balance as a lump sum each year without incurring an early redemption charge
Arrangement fee: £1,495
Redemption Fee: 2% of the outstanding mortgage balance until third anniversary plus repayment of cashback/legal fees
Tel: 0870 6000 367
Abbey has introduced a three-year tracker to add to the existing two-year tracker, with rates starting at 3.99 per cent up to 75 per cent loan to value.
London & Country Mortgages technical manager Richard Morea says the Abbey products are valuable as there are very few lenders offering trackers up to 75 per cent loan to value over a three-year term.
Morea says many borrowers looking for variable deals are finding themselves excluded from the best deals up to 60 per cent loan to value due to the sharp drop in property values. The Abbey range provides a more transparent option to the discounts on offer and a market leading rate.
He believes the remortgage option at 3.99 per cent will be the most widely used as the free valuation and legal work will offset the £1,495 fee. Also, he says the maximum loan is a “healthy £350,000, which will encompass many remortgage clients.”
For borrowers wanting to make overpayments, Abbey allows 10 per cent a year without penalty.
Turning to less attractive features of the Abbey mortgage deals, Morea says the high fee means that for some borrowers the Halifax tracker at 2.59 per cent over base rate with a lower fee will offer better value.
He says Halifax will provide the main competition to the Abbey deal. Its base rate plus 2.59 per cent deal has a smaller fee than Abbey at £995, while matching the free valuation and legal work. Also, for those who are reluctant to pay big fees, Halifax has a version with a £495 fee at base rate plus 2.79 per cent.
Suitability to market: Good
Competitiveness of premiums: Good
Adviser remuneration: Good