Type: Flexible fixed-rate remortgage
Fixed term: Until June 30, 2012
Fixed rate: 3.99%
Minimum loan: £1,000
Maximum loan: Up to 65% of valuation subject to a maximum of £1m
Income multiples: Based on affordability
Conditions: One free standard mortgage valuation up to £650, free remoprtgage transfer service for remortgages
Flexible features: Unlimited overpayments, payment holidays of up to three months a year after the first six months, interest calculated daily
Arrangement fee: £800 plus £199 booking fee
Redemption fee: £125 admin fee payable only if mortgage is fully redeemed
Introducer’s fee: Subject to negotiation
Tel: 0845 7573612
This flexible two-year fixed-rate mortgage from Coventry Building Society is available for loans up to 65 per cent of valuation subject to a £1m maximum. Unlike some mortgages, it places no restrictions on overpayments or capital repayments within the fixed-rate period. It charges only a £125 administration fee if the mortgage is redeemed within the fixed-rate period.
Discussing how this product could be useful for IFAs and their clients, London & Country mortgages technical manager Richard Morea says: “Along with all Coventry’s fixed rates this two-year Flexx fixed deal offers some attractive flexibility in the form of a three-month payment break once only six months repayments have been made. The key feature, however, is the lack of early repayment charges, and therefore the ability to make unlimited overpayments.”
Morea notes that in common with other remortgage-only deals, it also offers a free valuation up to £650 and free legal work to smooth the path, with only the £199 booking fee to be paid on application. He adds that the £800 arrangement fee can be added to the loan.
Considering the deal’s suitability to the market he says: “Regardless of market conditions and interest rate forecasts, some borrowers always prefer the security of a fixed rate, even those that plan to reduce their mortgage dramatically in the short term.
Turning his attention to the less appealing features of the mortgage, Morea says: “The Coventry Building Society continues to support the broker market, and this product has a good combination of low set up costs and flexibility. However, other lenders can offer lower rates, with similar set up costs and/or a degree of flexibility, which are likely to prove more attractive to the borrower.
Discussing the main features of some of the deals that he thinks will compete with the Coventry product Morea says: “Direct competition will come from Co-Operative’s 3.19 per cent 2 year fixed rate.” He points out that the Co-Operative deal has the same set up costs as the Coventry product, allows a 10 per cent overpayment facility and has similar underpayment/payment holiday features.
He also mentions First Direct’s 3.29 per cent two-year fixed deal, available to 75 per cent of valuation, with unlimited overpayments and an offset facility. An Offset facility allows borrowers to reduce their mortgage repayments using their savings accounts and/or current accounts. For example, borrowers with a £100,000 mortgage and £10,000 in savings would pay interest only on £90,000.
“From the broker market, the Accord range of two-year deals look strong, but if it’s no early repayment charges that is needed, the Coventry deal cannot be beaten,” says Morea.
Suitability to market: Good
Competitiveness of rate: Average
Adviser remuneration: Good