Type: Fixed-rate mortgage
Fixed term: Until June 30, 2011
Fixed rate: 6.99%
Minimum loan: £25,001
Maximum loan: Up to 95% of valuation subject to a maximum of £250,000
Income multiples: Based on affordability
Conditions: Capital repayments up to 5% a year allowed without penalty, one free valuation up to £650, mortgage not available for properties in the Scottish Isles
Arrangement fee: £500 plus £199 booking fee
Redemption fee: 4% of amount repaid in first three years
Introducer’s fee: Subject to negotiation
Tel: 0845 766 5522
This three-year fixed-rate from the Coventry Building Society is aimed at first-time buyers.
London & Country mortgage specialist Richard Morea thinks it is encouraging to see new products aimed at first-time buyers considering LTVs of 100 per cent plus are a thing of the past and that some lenders are withdrawing from 95 per cent lending.
“The rate is likely to mean that business volumes will be slow at outset, given that it is 1.4 per cent off the market leader. However there are only a handful of other lenders offering a 95 per cent three-year fix without a higher lending charge and it is unlikely to be long before the deal looks a lot more interesting to first-time buyers,” says Morea.
He notes there is the benefit of a reasonable £199 booking fee, which must be paid on application, and a £500 arrangement fee, which can be added to the loan. Free valuation fee up to £650 should satisfy most first-time buyers in Morea’s view, as it will cover property up to £900,000.
He also feels the penalty free overpayments of up to 5 per cent a year will be valuable in trying to maintain some equity in the current climate and uncertainty over how long it will last.
The rate is the main drawback for Morea. “While it will quickly become more competitive, it is currently a long way from being quotable, even ignoring the direct products. It could only take one lender to withdraw and Coventry could see a surge in applications, which could bring problems,” he says.
Morea concludes that competition will come from Bradford & Bingley and Nationwide.
Suitability to market: Good
Competitiveness of rate: Average
Adviser remuneration: Good