View more on these topics

A&L makes a saving

Alliance & Leicester

Two-Year FeeSaver Tracker

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.”

BROKER RATINGS

Suitability to market: Average
Competitiveness of rate: Average
Flexibility: Good
Adviser remuneration: Good

Overall 7/10

Recommended

Economic forecast is downgraded

The economic growth forecast for 2008 has been downgraded from 2.5-3 per cent to 2-2.5 per cent. Darling blamed “increased economic uncertainty” and “turbulence in America, Asia and Europe”.

Little movement in lending for August

The Council of Mortgage Lenders says total gross lending was broadly flat month on month in August at £34bn compared with £34.1bn in July. However, lending for house purchase is down by 11 per cent compared with last August.

FSA examines Royal London levy for Omo

The FSA says it is looking into reports that Royal London charges customers thousands of pounds for exercising their open-market option.Reports last week suggested that customers who decided not to take an annuity with Prudential, which has an agreement with Royal London to provide annuities, were still charged 3 per cent commission when they exercised […]

IHT: What were you doing in 2009?

One of the best sources of new business is your existing clients and, if they are estate planning clients, regular reviews are needed because people’s inheritance tax (IHT) problems tend to only get worse. Now, not a lot of things remain at the same rate as in 2009. If we turn the clock back, it […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment