Type: Tracker mortgage
Tracker term: Two years
Tracker rate: 0.34% above the Bank of England base rate
Payable rate: 6.09%
Minimum loan: £25,000
Maximum loan: Up to 95% of valuation subject to a maximum of £250,000, up to 90% subject to a maximum of £500,000, up to 85% of valuation subject to a maximum of £999,999
Income multiples: Based on affordability
Conditions: Free valuation, free mortgage transfer service or £250 cashback for remortgages
Flexible features: Overpayments, underpayments, payment holidays, lump sum withdrawals, interest calculated daily
Arrangement fee: None
Redemption fee: 3% of the amount repaid in the first two years if mortgage is fully redeemed
Introducer’s fee: Subject to negotiation
Tel: 0845 300 2563
This Alliance & Leicester deal is fully flexible and tracks at 0.34 per cent above the base rate for two years.
London & country mortgage specialist James Cotton says: “Alliance & Leicester’s FeeSaver tracker is pegged at 0.34 per cent above base for two years giving a current rate of 6.09 per cent. The rate then reverts to 0.99 per cent over base for the remaining term.”
Cotton notes the deal is available up to 95 per cent of valuation and as the name suggests it has no arrangement fee. It also offers a refunded valuation and either free legal work or £250 cashback for remortgages.
“The deal has early repayment charges for two years, but has flexible features that allow borrowers to make unlimited overpayments, borrow back and take payment holidays,” says Cotton.
Turning to the less appealing aspects of the deal Cotton says: “A&L’s usual higher lending charge will be charged on loans above 90 per cent LTV.” He adds that depending on loan size, borrowers could get a better overall deal by paying an arrangement fee.
“For those who are after a fee-free deal, Nationwide has two-year trackers at 5.88 per cent for purchases and 6.08 per cent for remortgage up to 90 per cent LTV. These have no arrangement fee, but they don’t have the flexibility of the A&L deal.”
Cotton believes that one deal that should provide a lot of competition is Woolwich’s lifetime tracker at 5.92 per cent for loans up to 60 per cent of valuation and 6.03 per cent up to 80 per cent. It also has no arrangement fee and remortgage freebies, but has the bonus of no early redemption charges at all and no jump in rate after two years.”
However, he adds that the Woolwich deal does jump to 6.34 per cent for loans above 80 per cent of valuation and any funds borrowed back will be at the standard variable rate rather than scheme rate.
Cotton concludes: “Overall, this is a good deal for borrowers who need both a fee-free deal and flexibility. Many other borrowers will be better off paying a fee in return for a lower rate and brokers should consider some of the better lifetime deals as alternatives.”
Suitability to market: Average
Competitiveness of rate: Average
Adviser remuneration: Good