Type: Flexible tracker mortgage
Tracker term: Two years
Tracker rate: 2.29% above Bank of England base rate
Payable rate: 2.79%
Minimum loan: £50,000
Maximum loan: Up to 60% of valuation subject to a maximum of £999,999
Income multiples: Based on affordability
Flexible features: Overpayments, underpayments, payment holidays, lump sum withdrawals, interest calculated daily
Conditions: Free valuation, mortgage transfer service or £200 cashback for remortgages
Arrangement fee: 2% of the original loan
Redemption fee: 3% of the amount repaid in first two years if mortgage is repaid in full
Introducer’s fee: Subject to negotiation
Tel: 0844 8009999
This flexible two-year tracker has a payable rate of 2.79 per cent.
Discussing the strong points of this deal, Bestinvest mortgage manager Peter O’Donovan says: “This is a market leading rate through intermediary channels and will provide a borrower with low monthly payments for at least the first year.
“It provides excellent flexibility in that there are no restrictions on overpayments, as long the mortgage is not completely redeemed, and any payments can be redrawn.”
He says the loan size up to £999,999 is better than most lenders, who add a premium to loans over £500,000. “There is no premium on remortgages with the valuation and legal fees package. A&L pay normal market introducer’s fees.”
Considering the negative aspects of this deal O’Donovan says: “I don’t like the arrangement fee. At 2 per cent, it can becomes less cost effective on amounts above £100,000.”
He expects competition to come from a Scottish Widows tracker at 2.69 per cent above the base rate, with an arrangement fee of £999. He also mentions Nationwide’s three year tracker at 2.78 per cent above the base rate. “I think that the flexibility on a short-term product is required less than, say, a five-year term,” he says.
Summing up O’Donovan says: “A&L has continued to supply market leading rates to intermediaries with good flexibility. Its online and administration is excellent, and its lending criteria is very flexible. However, it is a shame it has installed a percentage based arrangement fee. At the maximum loan, I can’t see many people paying nearly £20,000 as an arrangement fee – or anything over £2,000 – for a two year product.”
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Good