Type: Fixed-rate mortgage
Fixed term: Until January 2, 2014
Fixed rate: 4.99%
Minimum loan: £6,000
Maximum loan: Up to 75% of valuation subject to a maximum of £1m
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 legal fees or £250 contribution towards legal costs
Arrangement fee: £995
Redemption fee: 4% of amount repaid in first four years plus repayment of cashback or up to £400 for legal work if mortgage repaid on or before October 2, 2011
Introducer’s fee: Refer to lender
This deal from Abbey for Intermediaries is fixed at 4.99 per cent until January 2, 2014. It is available for loans of up to 70 per cent of valuation, subject to a maximum of £1m.
Belgravia Insurance Consultants consultant Paul White thinks this deal is attractive for borrowers who do not want to part with any money in respect of valuation or legal fees.
He says it is debateable whether now is the right time for borrowers to fix their mortgage rates, but adds that there will be borrowers who want to know what their costs will be for the next four years, when interest rates should be rising.
White notes that there is no higher lending charge and that there are various other benefits, such as a flat £995 arrangement fee, a free valuation for properties up to a generous level of £2.5m, £250 towards legal costs as desired and a 10 per cent annual capital repayment facility, set at a realistic £500 minimum.
“The ability to take a cashback instead of Free Legals, allows the broker to source the conveyancing, remain in control of the process and receive a modest referral fee in return,” says White.
Turning to the less attractive features of the deal White says: “Most competitive products have a loan-to-valuation of 75 per cent, so Abbey should have followed suit.
White says a concern has been Abbey’s closure of regional processing centres and centralising in Southampton. “A few months ago, long waits on the telephone were to be expected before your call was answered, but these have now become much shorter.
“The Abbey introducer website is definitely not my favourite, as any amendments cannot be handled in Southampton and the broker has to resubmit the case.” He also thinks that Abbey’s no-notice criteria changes do not help the broker at all and disappoint the borrower. “Abbey’s restriction of debt consolidation to the lesser of £30,000 or half the value of the mortgage should keep the credit crunch alive for a little bit longer,” he says.
Scanning the market for potential competitors White says: “The Woolwich’s 4.49 per cent fix until January 31, 2013 sneaks into the year of comparison for the Abbey product and beats the rate by 0.5 per cent.”
He says the Woolwich deal offers a free valuation and free legal fees, with a marginally more expensive arrangement fee of £999. He thinks that the Abbey product may be preferred if an income stretch is required. The Woolwich has the same 70 per cent LTV limit as the Abbey deal.
“The Cheltenham & Gloucester’s 4.69 per cent fix until January 31, 2013 also beats the Abbey product on rate,” says White. It also provides a free valuations and free legal fees, and has exactly the same arrangement fee, but there is a also a booking fee of £99. This may be off-putting compared with the Abbey’s cleaner product.”
White adds that the LTV on the C&G deal goes up to 75 per cent, and thinks this may tip the scales in its favour.
Suitability to market: Average
Competitiveness of rate: Average
Adviser remuneration: Average